Sample/problem set questions chapter 10, 11, 12, & 13

Participation in Part B of Medicare is

Voluntary

According to surveys by the Medical Group Management Association, the average primary care physician earned approximately ________ in 2010

$200,000

How much did pharmaceutical companies spend on direct-to-consumer advertising in 2019?

$6.1 billion

According to 2020 data, approximately how many seniors were enrolled in Medicare Advantage (MA) plans?

25 million

Of the new drugs introduced in the United States between 1940 and 1990, what percentage were discovered by U.S. firms?

60 percent

Part B pays what percentage of the allowable fee set by Medicare?

80 percent

The most important source of funding for Medicare is

A 2.9 percent payroll tax paid by all workers, regardless of their age

The tax fully dedicated to provide support for Medicare Part A is:

A 2.9 percent payroll tax paid by all workers, regardless of their age

The observed variations in practice patterns in different regions of the country are difficult to eliminate

A, B, and C 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 to patients

According to the model proposed by Reinhardt (1999), which of the following contribute to a physician's utility?

A. Demand inducement B. Hours worked C. Income

Which of the following approaches does managed care use to influence physical behavior?

A. Financial incentives B. Clinical rules

Which of the following are viable options for Medicare reform?

A. Raise the eligibility age B. Limit ability to purchase first-dollar coverage C. Simplify the benefit structure

Which of the following best explains the differences in pharmaceutical pricing observed between developed countries?

Aggressive price regulation

In the nineteenth century, hospitals had notorious reputations—they were questionable places to visit, risky places to stay. What advances changed all this?

All of the above A. Development of the germ theory of disease B. Advances in medical technology C. Availability of health insurance to pay the bills

To address the shortage of physicians on the horizon, it will be necessary to

All of the above: A. Build more medical schools B. Provide more grants and scholarships for medical education C. Allow the admission of more foreign-educated physicians

Compared to the not-for-profit organizational form, the for-profit environment

Allows for the transfer of assets

Which of the following is a true statement about long-term care?

Almost half of all nursing home residents are over age 85

By the time a drug enters the clinical rule phase of testing on humans,

An average of five years of the overall patent life has already expired

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

Cost shifting

The amount that Medicare pays a hospital for treating a Medicare patient is determined:

At the point when the diagnostic is made

In order to be a successful price discriminator, a provider must have a degree of market power (depicted by a downward-sloping demand curve) and meet what other condition(s)?

Both A and B A. Prospective customers must be categorized according to willingness-to-pay B. Opportunities for resale of the good or service must be limited

Physicians who accept assignment on their Medicare patients

Both B and C B. Agree to forego balance billing C. Agree to charge private insurance patients the same fees as Medicare patients

Medical care spending escalates as an individual reaches old age. Which of the following statements is true regarding medical care spending and the elderly?

Chronic illnesses increase as we age as do the multiplicity of services available to treat those with illnesses

Which of the following statements supports the conclusion that they hospital sector is not perfectly competitive?

Consumers are relatively uniformed and rely on physicians

The merger of two community hospitals located in the same geographic market it called:

Horizontal integration

Price controls are a common feature in the pharmaceutical industry in most developed countries. Which of the following statements about price control is true?

Countries with the most stringent price controls do the least research

Which of the following statements concerning the impact of patents on drug pricing is most correct?

Economic welfare falls

Which of the following services is covered under Part B of Medicare?

Emergency room services

The only disease-specific group eligible for Medicare are those suffering from

End-stage renal disease

The regulatory agency with oversight responsibility for the pharmaceutical industry is the

FDA

This study was the catalyst for the early twentieth-century reform of medical education in the United States. What was it?

Flexner Report

For Part A coverage of Medicare, the patient pays a deductible approximately equal to the cost of the first day in the hospital; Medicare pays

For days 2-60

Horizontal integration allows firms to do all of the following except

Fully integrate with primary care clinics and acute care nursing facilities

Which of the following best describes how the patent system helps to encourage the development of new drugs?

Gives the firm temporary monopoly powers

Which of the following options can help reduce the monopsony power exhibited in the nursing market?

Greater mobility

The merger of two community hospitals located in the same geographic market is called

Horizontal integration

How do individuals enroll in Part A of Medicare?

Individuals are automatically enrolled on their 65th birthday as long as they or their spouse has paid into the Social Security system for 10 years

The rate of return of an investment in medical education

Is inversely related to the length of time spent in formal schooling

What was the main effect of the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) on United States' domestic policy?

It extended the life of patents from 17 years from the date of grant to 20 years from the date of application

Possibly, the most serious flaw in the Medicare system is the fact that

It provides no real protection against catastrophic losses resulting from unusually long hospital stays

One of the most serious weaknesses in the Medicare system is that

It provides poor insurance coverage for unusually long hospital stays

Economics of scale exists when

Long-run average costs decline as output increases

Rent-seeking behavior results in

Lower economic activity by diverting resource to less-productive uses

The fastest-growing segment of pharmaceutical marketing is:

Marketing to the consumer

In order to be a successful price discriminator, a provider must have a degree of market power (depicted by a downward-sloping demand curve) and meet what other condition(s)?

Markets must be segmentable, identifying differences in ability to pay

Which benefits are provided through Part A of Medicare?

Medical hospital insurance

Pharmaceutical companies receive patents as an exclusive right to produce a drug. This results in

Monopoly status in the production of the drug

Which of the following would increase the supply of physicians?

More scholarships and grants to cover medical school tuition

What is the average length of stay to classify a hospital as long term

More than 30 days

Changes caused by the shift from charge-based rates to negotiated rates has had which of the following results?

Most hospitals experience a gap between the amount they receive from their payers and the amount billed, with receipts as low as 20 percent of amount billed

Which of the following is an example of a subsidy to the hospital sector?

Not-for-profit exemption

Consolidation activity in the hospital industry

Occurs for same reasons that cause consolidation in other industries

In 2010, the medical specialty that earned the highest rate of return on investment was

Orthopedic surgery

Using the physician-control model to explain hospital behavior leads to which of the following conclusions?

Other medical inputs tend to be over used to maximize physicians' productivity

Using the physician-control model to explain hospital behavior leads to which of the following conclusions?

Other medical inputs tend to be overused to maximize physicians' productivity

Which of the following statements is true concerning the trend in hospital care between in-patient and out-patient services since the mid-1980s?

Out-patient services have increased substantially because admissions are down

Which of the following statements is true concerning the trend in community hospital care between inpatient and outpatient services since the mid-1980s?

Outpatient services have been growing, while inpatient services have been declining

Which of the following is the primary source of funding for Part A benefits?

Payroll taxes

Danzon and Furukawa (2003) argue that:

Pharmaceutical price differences across countries are roughly in line with differences in per capita gross domestic product, supporting the predictions of Ramsey pricing practices

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

Physician-induced demand

The majority of pharmaceutical advertising is directed at which of the following groups?

Physicians

Suppose the number of medical school graduates continues to increase over the next decade. Which of the following is true?

Physicians' salaries will rise if the demand for medical services rises more than the supply of physicians rises

Capacity-constrained medical providers who give free health care to the uninsured are most likely to engage in cost shifting by passing off excess costs to:

Privately insured patients

The dominant factor affecting medical care delivery and finance in the 1980s was

Prospective payments for hospitals

Legislation considered by congress to restrict legal immigration would:

Raise the costs of operating in many of the nation's rural and inner-city hospitals

Which of the following is the measure used in the alternative payment practice based on the amount of work performed?

Relative value unit (RVU)

The expanded use of prospective payment in hospitals has changed the nature of competition in that market. Which of the following statements is true?

Savings from prospective payments are substantial and due primarily to fewer hospital admissions and shorter hospital stays

Medicare and Medicaid were enacted by the Johnson administration in 1965 as amendments to which federal law already in existence?

Social Security Act

Surgical specialists earn more than general/family practice physicians. Which of the following statements is not true regarding this income differential?

Surgeons will always earn more than general practitioners because they are smarter than general practitioners

Which of the following statements is true about cost shifting in hospitals?

The ability to cost shift depends on a hospital's payer mix

The Medicare pay-as-you-go system is jeopardized by

The changing demographics of the U.S. population, with an increasing percentage of individuals over the age of 65

The Medicare pay-as-you-go system is jeopardized by:

The changing demographics of the United States' population, with an increasing percentage over the age of 65

The dominant factor affecting medical care delivery and finance in the 1960s was

The creation of Medicare and Medicaid

Starting salaries for female OB/GYNs are higher than those of male OB/GYNs. What is the best explanation for this?

The demand for female OB/GYNs is greater than the demand for male OB/GYNs

Physicians' salaries increased substantially over the decade 1996-2005 from an average of $215,000 to $315,000. What is the best explanation for this?

The demand for physicians has increased

The dominant factor affecting medical care delivery and finance in the 1990s was

The explosive growth of managed care

What is the most significant cost of attending medical school?

The income foregone

What is the most important factor leading to rising health care costs in the United States since 1980?

The increased use of expensive medical technology

Which of the following best describes the relation between the length of time a drug has been on the market and its return on sales?

The longer time on the market, the lower the return on sales

The predominate organizational form for U.S. hospitals is not-for-profit. Why?

The not-for-profit form provides the most benefits to physicians

Finkelstein and McKnight (2008) provide an empirical estimate of the benefits to seniors of the 1965 introduction of Medicare. Which of the following statements is true concerning the results of this study?

The real impact of the introduction of Medicare was on the reduction in out-of-pocket health care spending for households faced with catastrophic events (those in the top 25 percent of spenders)

Which of the following statements about the distribution of physicians among specialties is true in the United States?

There are twice as many specialists as there are generalists

One of the primary reasons that costly technology is being introduced into the health care system is that

Third-party insurance finances most of the cost of care

Government regulators sometimes set the price of a drug at its marginal cost of production without including a fair share of the global joint cost of research and development. Which of the following statements is true about this practice?

This practice is a classic example of free riding

Suppose the market for nursing services in a local community is so dominated by a singly community hospital that for all practical purposes it is considered a monopsony. Using the diagram below, answer questions 1 & 2; 1. What is the equilibrium wage and level of employment under monopsony?

W0 and E0

Suppose the market for nursing services in a local community is so dominated by a singly community hospital that for all practical purposes it is considered a monopsony. Using the diagram below, answer questions 1 & 2; 2. If the market were perfectly competitive instead of dominated by a monopsonist, what would the equilibrium wage and level of employment be?

W1 and E1

A type I error is:

When a harmful drug is allowed into the market

The following diagram depicts the market for physicians' services that is originally in equilibrium at the point where demand and supply (D0 and S0) intersect. As physician supply increases from S0 to S1, an even larger concurrent shift in demand from D0 to D1:

Will increase demand for physicians' services, but not spending