Health Economics Final

. Obesity prevalence in the United States is the highest in the developed world and has worsened since the 1960s. a. True b. False

A

A "deductible" is defined as: A. a specified amount an insured member must pay during a policy period before the insurance plan kicks in and starts to provide financial protection. B. the amount of money that an insured member must pay for an insurance policy. C. a specific flat fee an insured member pays for each medical service. D. a fraction of the medical expenses that the insured member has to pay; the remaining percentage of the cost is paid by the health insurance plan.

A

A major factor contributing to the growth in employee-based health insurance in the United States has been A. the tax free treatment of health insurance as an employee benefit. B. the long standing tradition in the United States of providing a generous package of benefits to all workers. C. greater than average economic growth leading to increased demand for labor. D. legislation requiring all firms to provide health insurance to all full-time workers.

A

According to data from the Census Bureau, what percent of the U.S. population was uninsured in the year 2016? A. 8.8 percent B. 10.2 percent C. 12.8 percent D. 18.2 percent

A

Decisions concerning what different combinations of medical good and services to produce in an economy deal with: A. Production efficiency B. Allocative efficiency C. Equity D. None of the above

A

Elimination of the tax-exempt status of employer-sponsored health insurance would most likely lead to _______ in the purchase of health insurance. A. a decrease B. an increase C. no change

A

In 2017, health expenditures in the US exceeded $3 trillion A. true B. false

A

Moral hazard and adverse selection are both examples of A. asymmetric information. B. the principal-agent problem. C. efficiency in markets. D. perfect information.

A

Mortality rate and morbidity are the most popular metrics used to evaluate population-based health outcomes. a. True b. False

A

Network model HMOs use _______ to shift financial risk back onto providers. a. capitation. b. practice guidelines. c. open panels. d. closed panels. e. formularies

A

On average, smokers cut 10 years off their life expectancies due to smoking. a. True b. False

A

People buy insurance A. because they are risk averse. B. to defer consumption. C. to maximize their welfare. D. to ensure against poor health.

A

The intangible costs associated with reduced quality of life include A. pain and suffering B. Lost productivity at work C. The cost of home remodeling to accommodate a physical handicap D. potential income lost due to premature death E. All of the above are intangible costs

A

The most significant expansion of Medicaid since its inception occurred in 1997 and is referred to as a. SCHIP. b. SHIP. c. TANF. d. AFDC

A

The only disease-specific group eligible for Medicare are those suffering from a. end-stage renal disease. b. advanced coronary artery disease. c. metastasized cancer. d. Diabetes.

A

The only disease-specific group eligible for Medicare are those suffering from a. end-stage renal disease. b. advanced coronary artery disease. c. metastasized cancer. d. diabetes

A

The prevalence rate is the total number of cases of a disease in a population divided by the total population A. true B. false

A

The problem of _______ is sometimes referred to as hidden information problem. A. adverse selection B. asymmetric information C. hidden action D. moral hazard

A

_______ is the situation where insured individuals alter their behavior because they are no longer financially responsible for the full cost of their behavior. A. Moral Hazard B. Asymmetric Information C. Rationality D. Adverse Selection

A

A key difference between an HMO and a PPO is: A. PPOs typically require referrals by primary care physicians in order for a policyholder to see a specialist. B. PPOs typically do not require referrals by primary care physicians in order for a policyholder to see a specialist. C. HMOs typically provide policyholders coverage to see a wider range of providers than PPOs. D. HMOs typically charge much higher premiums than PPOs.

B

A person's "certainty equivalent" or "CE" represents: A. The lowest amount of money that a person is willing to pay for insurance. B. The lowest level of wealth that a person is willing to tolerate in order to avoid uncertainty. C. The highest level of wealth that a person reaches in their lifetime. D. The level of wealth that a person will be left with after paying for a particular medical expense while uninsured.

B

Adverse selection means that a. people who are healthy are more likely to buy insurance. b. people who are sick are more likely to buy insurance. c. people who are sick are just as likely to buy insurance as people who are healthy. d. people who are sick are less likely to buy insurance.

B

Alcohol consumption can cause premature death and play a significant role in all violent crime, but in some individuals, moderate consumption can have some health benefits including: a. Higher life expectancy b. Higher HDL type cholesterol c. Better health outcomes d. All of the above

B

Although eligibility varies from state to state, _______ is a public insurance program intended to cover low-income individuals, children, and pregnant women. a. Medicare b. Medicaid c. charitable care d. Blue Cross

B

Decisions concerning the best combination of medical goods and services to produce in an economy deal with: A. Production efficiency B. Allocative efficiency C. Equity D. None of the above

B

In the years between 1966 and 2016, Medicaid spending dropped by roughly $200 billion. a. True b. False

B

Kaiser-Permanente, the nation's largest health maintenance organization, was founded a. to provide cost-effective medical care to Kaiser employees. b. to provide access to medical care to Kaiser workers in remote locations where medical services were in short supply. c. to slow the rate of growth in medical spending for Kaiser employees. d. as a group-model HMO. e. as a network-model HMO

B

Kindig and Stoddart (2003) defined population health as "Health outcomes of an entire population, including the distribution of such outcomes within a group of individuals." a. True b. False

B

Medicare and Medicaid were enacted by the Johnson administration in 1965 as amendments to which federal law already in existence? a. Welfare Act of 1960. b. Social Security Act. c. Employee Retirement and Income Security Act. d. Managed Care Act. e. Equal Rights Act

B

Most empirical studies show that the cost-savings provided by managed care are accomplished by a. better preventive care. b. reducing the rate of hospitalization. c. denying access to costly specialty care. d. switching to generic drugs. e. all of the above.

B

People obtaining health insurance as part of a group are likely to pay higher premiums than those who acquire coverage individually. A. True B. False

B

People with higher income are less likely to have better health outcomes and have higher mortality rate. a. True b. False

B

Pharmaceutical companies receive patents as an exclusive right to produce a drug. This results in a. normal profits on the patented drug. b. monopoly status in the production of the drug. c. lower prices for patients requiring the drug. d. orphan drug status. e. fewer new chemical compounds discovered.

B

Possibly, the most serious flaw in the Medicare system is the fact that a. the deductible is too high for most elders to afford. b. it provides no real protection against catastrophic losses resulting from unusually long hospital stays. c. the definition of an episode of illness can lead to patients paying the deductible more than once during the calendar year. d. coverage for outpatient drugs is poor. e. elders are required to pay monthly premiums to participate in Part B.

B

The United States has the highest rate of low-birth-weight infants than other developed countries. a. True b. False

B

The _______ the coinsurance rate, the _______ the expected benefit to the individual. A. higher; higher B. higher; lower C. lower; lower

B

The dominant factor affecting medical care delivery and finance in the 1980s was a. the Hill-Burton Act. b. prospective payment for hospitals. c. creation of Medicare and Medicaid. d. the explosive growth of managed care. e. ERISA.

B

The health maintenance organization where the physicians are salaried employees of the HMO is called a. a group-model HMO. b. a staff-model HMO. c. a network-model HMO. d. an IPA. e. a direct-contract HMO.

B

The merger of two community hospitals located in the same geographic market is called a. vertical integration. b. horizontal integration. c. a leveraged buyout. d. a conglomerate merger. e. a real shame since one of the hospitals will likely close.

B

The morbidity rate is expressed as the number of deaths per 100,000 people, per year A. true B. false

B

The number one cause of death in the United States is A. AIDS B. heart disease C. cancer D. stroke E. homicide and accidents

B

The problem of _______ is sometimes referred to as hidden action problem. A. adverse selection B. moral hazard C. asymmetric information D. hidden information

B

The purpose of not-for-profit hospitals in the early 20th century was a. providing specialty treatments and services. b. providing free care for the poor. c. general services and treatments. d. All of the above

B

The rate at which members of a group are newly diagnosed with a disease is called: a. Mortality rate b. Morbidity rate c. QOL

B

The regulatory agency with oversight responsibility for the pharmaceutical industry is the a. IRS. b. FDA. c. SEC. d. ITC. e. ATT.

B

Using the incremental cost-effective ratio, if a new medical technology costs less and is also less effective, then... A. the new medical technology dominates current medical technology B. The relative costs and benefits must be reviewed further C. Current medical technology dominates the new medical technology D. An expected cost and benefit analysis should be utilized

B

What is the motivation behind the cost-control features of managed care? a. To ensure access to specialty care through general practitioner gatekeepers. b. To influence the way physicians practice medicine by changing the financial incentive structure of medical care delivery. c. to shift the financial risk onto patients. d. to eliminate all the guesswork from diagnoses by establishing practice guidelines. e. to create competition by providing patients with a wide range of providers.

B

What is the relationship between adverse selection and the death spiral? A. As low-risk individuals leave the insurance market, premiums decrease as the average cost of care for enrollees increases. This results in a snowball effect where more low-risk individuals are then priced out of the market and premiums further decrease. B. As low-risk individuals leave the insurance market, premiums rapidly increase as the average cost of care for enrollees increases. This results in a snowball effect where more low-risk individuals are then priced out of the market and premiums further increase. C. There is no relationship between adverse selection and the death spiral. D. Premiums rapidly increase as more low-risk individuals enter the insurance market. This results in a snowball effect where more high-risk individuals are then priced out of the market and premiums further increase.

B

Which ethnic group has the highest life expectancy in the U.S.? a. Blacks b. Hispanics c. Whites

B

Which of the following is not one of main models of hospital behavior? a. Utility maximization b. For-profit hospitals c. Physician based d. Both a and b e. None of the above

B

Which of the following is not the World Health Organization (WHO) index to measure health system performance? a. Disability-adjusted life expectancy b. Morbidity c. Health disparities d. Responsiveness e. Fairness

B

Which of the following statements is based on normative analysis? A. a study by Hellinger estimates that the lifetime costs of treating someone with AIDS is over $100,000 B. To control health care expenditures, the US should adopt a national health program similar to Canada's C. According to Smith and Weston, having a colonoscopy after age 50 can help detect colon cancer early. D. According to the CDC, women under 18 have an increased risk of lower birth weight babies

B

Which of the following statements regarding cost sharing is true? A. According to the concept of moral hazard, insurance decreases individual consumption of medical care. B. Lower coinsurance rates are associated with higher consumption of medical care. C. Higher coinsurance rates are associated with higher consumption of medical care. D. Coinsurance rates have no relationship with consumption of medical care.

B

Whites have experienced an increase in life expectancy that is more than twice that of blacks. a. True b. False

B

process quality refers to the physical and human resources of the medical care organization A. true B. false

B

An economic model that shows the various combinations of medical and nonmedical goods and services that can be produced efficiently given the stock of resources and technology is called the: a. Demand curve b. The supply curve c. Production curve d. Allocative efficiency curve

C

Congressional studies report that Medicare payments fall 11 percent below the cost of treating patients while private insurance patients pay 29 percent more than cost. This phenomenon is called a. price discrimination. b. the Medigap. c. cost-shifting. d. cost-plus pricing. e. revenue enhancing.

C

Consolidation activity in the hospital industry a. has slowed due to government regulations. b. has created a large number of nationwide for-profit hospital chains. c. has occurred almost exclusively at the local level. d. occurs for same reasons that cause consolidation in other industries.

C

Decisions concerning who should receive the medical good and services to produce in an economy deal with: A. Production efficiency B. Allocative efficiency C. Equity D. None of the above

C

If health care spending is already on a flat-of-the-curve, it may not be possible to buy improved health status by increasing spending. In this situation, the best way to improve health status may be to A. increase the availability of government health insurance B. invest in biotechnology to determine the genetic factors that improve health C. improve life-style decisions by reducing smoking, alcohol consumption, and drug use D. Improve access to medical care

C

Insurers try to minimize moral hazard by A. only selling policies to individuals with high ethical standards. B. requiring advance payments of premiums. C. charging deductibles and coinsurance. D. refusing to sell insurance to individuals with chronic illnesses.

C

Moving from one point to another on a production possibilities curve implies... A. increasing the production of both goods B. decreasing the production of both goods C. increasing the production of one good and decreasing the production of another D. holding the production levels of both goods constant

C

One of the most serious weaknesses in the Medicare system is that a. patients are not able to choose their own physicians. b. the definition of an episode of illness is too restrictive. c. it provides poor insurance coverage for unusually long hospital stays. d. patients must pay a deductible every time they enter the hospital. e. Part B is voluntary

C

One of the primary reasons that costly technology is being introduced into the health care system is a. research scientists have successfully mapped the human genome. b. high cost is synonymous with better outcomes. c. third-party insurance finances most of the cost of care. d. all of the above.

C

One of the reasons that women live longer than men in most societies is that: a. Women exercise more than men b. Women eat healthier than men c. Men smoke more regularly than women

C

Participation in Part B of Medicare is a. applicable to supplemental hospital payments. b. applicable to nursing home stays c. voluntary. d. involuntary. e. none of the above

C

Perinatal mortality is defined as late fetal death plus deaths in the first ____ after birth. a. 10 days b. 15 days c. 30 days d. 45 days

C

Physicians who own their own diagnostic testing facilities tend to order more tests, charge higher fees for them, and have higher total bills to patients. This practice of self-referral is an example of a. moral hazard. b. adverse selection. c. physician-induced demand. d. cognitive dissonance.

C

Teen pregnancy is a concern among public health officials and policy makers because of the follow associated problems except: a. Low birth weight b. Preterm deliveries c. Poverty d. Risk of infant mortality

C

The Medicare pay-as-you-go system is jeopardized by a. an overly generous fee schedule that pays physicians more than private insurance for most procedures. b. the changing demographics of the U.S. population with an increasing percentage over the age of 65. c. a reliance on the premiums paid by the elderly themselves to fund a majority of the total cost of the system. d. allowing physicians to balance bill their patients. e. the rising costs of long-term care.

C

The US market system is best described as a... A. Pure market system B. Perfect egalitarian system C. Mixed distribution system D. None of the above

C

The dominant factor affecting medical care delivery and finance in the 1960s was a. the Hill-Burton Act. b. prospective payment for hospitals. c. the creation of Medicare and Medicaid. d. the explosive growth of managed care. e. the passage of ERISA

C

The fastest-growing segment of pharmaceutical marketing is: a. marketing to physicians b. marketing to nurse practitioners c. marketing to the consumer d. none of these

C

The most important source of funding for Medicare is a. the federal income tax. b. premiums paid by elders and deducted from their monthly Social Security checks. c. a 2.9 percent payroll tax paid by all workers, regardless of their age. d. proceeds from the Medicare Trust Fund. e. a tax on the health insurance premiums pay by all group plans.

C

The thinking behind counteracting moral hazard is that: A. No matter what an insured's exposure is to financial risk, they are unlikely to mitigate that risk. B. The more exposed an insured is to financial risk, the fewer actions they will take to mitigate that risk. C. The more exposed an insured is to financial risk, the more actions they will take to mitigate that risk. D. The less exposed an insured is to financial risk, the more actions they will take to mitigate that risk.

C

Which of the following is a problem of adverse selection? A. Individuals use more medical services as a result of their purchase of a health insurance plan. B. A person takes up the hobby of bungee jumping after purchasing health insurance. C. The insurance company has a problem of distinguishing low-risk from high-risk individuals. D. All of the above.

C

Which of the following is not part of the three dimensions of health care delivery known as the "Triple Aim"? a. Improving patients experience of care b. Improving the health of the population c. Expanding health insurance d. Reducing the per capita costs

C

Which of the following statements about the distribution of physicians among specialties is true in the United States? a. The majority of physicians specialize in general/family practice. b. There are twice as many generalists as there are specialists. c. There are twice as many specialists as there are generalists. d. The specialty distribution in the U.S. is similar to that of the rest of the world.

C

Which of the following statements accurately describes the relationship between coinsurance rates and moral hazard? A. Lower coinsurance rates decreases the risk of moral hazard. B. Coinsurance rates and moral hazard are independent of each other. C. Lower coinsurance rates increases the risk of moral hazard. D. Higher coinsurance rates increases the risk of moral hazard.

C

From 2001 to 2011 life expectancy for the total U.S. population increased from: a. 75.3 - 79.0 years b. 77.2 - 81.4 years c. 78.7 - 81.4 years d. 77.2 - to 78.7

D

In the 19th century hospitals had notorious reputations—questionable places to visit, risky places to stay. What advances changed all this? a. Development of the germ theory of disease. b. Advances in medical technology. c. Availability of health insurance to pay the bills. d. All of the above.

D

Moral hazard refers to a. illegal behavior by insurers. b. illegal behavior by consumers. c. consumers' choosing particular plans based on their health statuses. d. behavior that occurs because of the availability of insurance.

D

Most Medicaid dollars are spent on a. low-income children. b. low-income pregnant women. c. low-income childless adults. d. disabled and elderly.

D

Surgical specialists earn more than general/family practice physicians. Which of the following statements is not true regarding this income differential? a. Surgeons earn more because their practice costs, including medical malpractice insurance is higher. b. Surgeons earn more to compensate them for the extra years spent as residents. c. Physicians' incomes are determined to a large extent by supply and demand conditions with respect to each specialty. d. Surgeons will always earn more than general practitioners because they are smarter than general practitioners.

D

The RAND Health Insurance experiment compared costs of HMOs with the costs of indemnity insurers. The study a. confirmed the cost-saving potential of HMOs. b. Found no cost-saving by HMOs. c. the HMO had per capita costs that were 28% lower than the indemnity d. both a and c

D

The direct costs in an economic evaluation include all the following except A. hospitalization B. Medical devices C. Transportation to and from the physician's office D. Reduced productivity at work E. All of the above

D

The health maintenance organization that contracts with individual physicians or group practices to provide care for a specified group of enrollees is called a. a group-model HMO. b. a staff-model HMO. c. a network-model HMO. d. an IPA. e. a direct-contract HMO.

D

The most important aspect of the change from fee-for-service to capitation is that a. physicians get their money quicker. b. patients get faster service since physicians don't have to worry about getting paid. c. physicians make less money. d. the most valuable patient is no longer the sickest, but the most healthy.

D

The observed variations in practice patterns in different regions of the country are difficult to eliminate a. because of the many alternative treatment options available for most ailments. b. due to the localized nature of most medical practice. c. because it is difficult to change the preferences of physicians and patients. d. all of these are true

D

To address the shortage of physicians on the horizon, it will be necessary to a. build more medical schools. b. provide more grants and scholarships for medical education. c. allow the admission of more foreign-educated physicians. d. all of these are true.

D

To control moral hazard and the increased spending that accompanies it, managed care providers include _______ in contracts with providers. a. clinical rules b. capitation c. risk sharing d. all of the above

D

What benefits did the Hill-Burton act provide before Medicare was implemented? a. Seniors only have to pay for the first day of hospital care and then they get the next 2-60 days of free hospital care. b. The act gave elderly Americans coverage for catastrophic medical costs. c. Gave the elderly coverage for prescription drugs in exchange for a monthly premium. d. The act required hospitals to give free service for those who didn't have the means to pay.

D

What is an actuarially fair insurance contract? A. A contract that ensures that the tax shield is less than the loading fee for the insurer. B. A contract that describes the percentage of the expected payout required for the insurer to stay in business. C. A contract that ensures that the tax shield is greater than the loading fee for the insurer. D. A contract in which the premium paid by the consumer is equal to the expected benefit paid back to the consumer in the case of a loss.

D

When an economy is operating inside its production possibilities frontier, we know that A. all of the economy's resources are fully employed B. economic growth would have to occur in order for the economy to move to a point on the curve C. In order to produce more of one good, the economy would have to give up some of the other good D. There are unused resources or inefficiencies in the economy

D

Which are the three criteria economists use to evaluate the effectiveness of a health care system? A. cost, access, efficiency B. cost, equity, access C. efficency, cost, quality D. costs, access, quality

D

Which of the following is a flaw of the patent system? a. They do not transfer to the holder the social surplus the invention generates b. It fails to account for beneficial externalities c. They create monopoly rents d. All of the above

D

Which of the following is true of teaching hospitals? a. Most teaching hospitals are located in major metropolitan areas. b. They usually have more beds, higher occupancy, and longer patient stays. c. They have higher costs than non-teaching hospitals. d. All of the above.

D

Which of the following represents an opportunity cost? A. Increases in the medical technology B. Reduction in fees for medicare patients C. increased enrollments at medical schools D. forgone geriatric care to provide additional maternity services

D

Which of the following statements is not true about managed care? a. Empirical evidence suggests that managed care can reduce health care spending. b. Most of managed care's savings can be traced to reduced hospitalization. c. There is more emphasis on preventive care in managed care. d. There is no credible evidence to suggest lower quality of care for any group of patients in managed care arrangements

D

Which type of managed care organization has the strictest cost control features? a. Group-model HMO. b. IPA. c. POS plan. d. Closed-panel HMO. e. PPO.

D

f Sara's expected medical care spending in the coming year is $3,000 and she has a coinsurance rate of 20 percent, her expected benefit from the contract is: A. $3,600. B. $600. C. $3,000. D. $2,400.

D

. Capitation a. creates pressures to provide fewer services. b. is a fixed payment determined in advance to pay for all medically-necessary care. c. is the maximum allowable fee in a fee-for-service system. d. shifts financial risk onto patients. e. Both a and b are correct.

E

Managed care a. establishes a system of retrospective payment determined ex ante. b. combines the responsibilities of payer and provider of medical services. c. attempts to shift a portion of the financial risk onto providers. d. attempts to shift a portion of the financial risk onto patients. e. Both b and c are correct.

E

Physicians who accept assignment on their Medicare patients a. bill patients for 80 percent of the allowable fee. b. agree to forego balance billing. c. accept the allowable fee for all services. d. agree to charge private insurance patients the same fees as Medicare patients. e. Both b and c.

E

Suppose the number of medical school graduates continues to increase over the next decade. Which of the following is true? a. Physicians' salaries must fall. b. Physicians' salaries must rise. c. Physicians' salaries will fall only if the demand for medical services falls. d. Physicians' salaries will fall if the demand for medical services rises more than the supply of physicians rises. e. Physicians' salaries will rise if the demand for medical services rises more than the supply of physicians rises.

E

The top ten causes of death in the US include all of the following but A. heart disease B. cancer C. suicide D. Kidney Disease E. AIDS

E