Self-Checks for Final

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Which of the following statements about the marginal efficiency of health capital (MEC) curve is (are) TRUE.

-The MEC curve highlights the role that health plays as an investment good in the Grossman model. -An examination of the MEC curve shows that the total increase in lifetime utility, which is the "return" or benefit of an investment to increase health, depends on the individual's starting level of health H. The marginal lifetime returns to health are high at low levels of health and low at high levels of health because of the diminishing marginal returns to health. -In order to guarantee the same rate of return as the market investment opportunity, health must pay a return of at least the market interest rate (r) plus the rate of depreciation of health due to aging ().

Assume an individual faces probability of illness p = 0.7. Using the income-utility diagram below, calculate the individuals expected utility under no insurance.

486.6

midpoint method

(Q2-Q1)/[(Q2+Q1)/2] / (P2-P1)/[(P2+P1)/2]

The terms "demand" and "supply" refer to the behavior of people as they interact with one another in a market: [A] represents the behavior of buyers and [B] represents the behavior of sellers.

A- demand B- Supply

Which of the following statements about the Beveridge model is (are) FALSE?

All citizens automatically receive insurance coverage through the government. The government runs hospitals and clinics. The government decides how many doctors and specialists will be working at each hospital. NONE are false

The set of policies that comprise the ______ model reflect two major values: solidarity and economic liberty.

Bismarck

The market for lemonade is initially in equilibrium. Temperatures soar during the month of July. All else equal, how does the heat wave affect the equilibrium price and quantity of lemonade?

Both equilibrium price and equilibrium quantity will increase

Based on Robinson Crusoe's PPF (below), the combination of goods (30 birds, 80 crabs) is ______. (picture n/a)

Combinations of goods (birds, crabs) beyond the frontier are unobtainable. Crusoe's choices are constrained by the fact that he only has 10 candy bars.

______ refers to the process of choosing an optimal treatment among all potentially cost-effective ones given a certain monetary value for each unit of health effect.

Cost-Benefit Analysis (CBA)

The market for lemonade is initially in equilibrium. Temperatures soar during the month of July. At the same time, Harris Teeter runs a promotion on lemons, lowering the price from $1.79 to $0.99/lb. How will the changing market conditions affect the EQUILIBRIUM QUANTITY of lemonade?

Equilibrium quantity will increase

TRUE/FALSE: Under the Bismarck model, health care is a good provided by the government and paid for with tax revenue, just like schools or libraries.

FALSE

The Oregon Medicaid study is an example of a natural experiment.

FALSE The Oregon Medicaid study is an example of a randomized experiment. A lottery was used to randomly assign individuals into groups: 'Winners' (Medicaid coverage = lower price of care) or 'Losers' (Uninsured = higher price of care)

TRUE/FALSE: The take-up rate of health insurance among people with good jobs (that is full-time jobs that have lasted longer than a year) has declined in recent years, and this is an important reason for the increase in uninsurance rates over those same years.

FALSE. Farber and Levy (2000) find that more and more US employers are offering peripheral, part-time jobs without health insurance, and this is explaining rising uninsurance.

TRUE/FALSE: The imposition of federally mandated maternity benefits had no effect on the mean wages of female workers.

FALSE. Gruber (1994) found that this law depressed the wages of female workers of childbearing age. This is evidence of wage pass-through.

TRUE/FALSE: A primary cause of increasing uninsurance in the U.S. over the past decade is that more employers are deciding to stop providing health insurance coverage entirely

FALSE. Many employers are still providing coverage, but there has been anincrease in "peripheral" jobs - like part-time jobs or temp jobs - that are noteligible for coverage.

TRUE/FALSE: The primary source of funding for the Medicare program is from premiums assessed on the elderly population, which is the primary population enrolled in the program.

FALSE. The primary source of funding is from payroll taxes on the employed population, most of whom are under age 65 and not on Medicare.

TRUE/FALSE: In employer-sponsored health insurance in the U.S., employers pay the largest share of the costs of health insurance.

FALSE. While it is nominally true that many employers pay a portion ofhealth insurance premiums for their workers, in equilibrium the wages ofworkers reflect the employer subsidy. It is more accurate to say that workerspay for their employer-sponsored health insurance plans, both throughassessed premiums and through lower wages.

Consider the two market (supply-and-demand) diagrams below. ______ provides a graphical interpretation of a negative externality, where the horizontal distance between and reflects the ______ of the market good.

Figure A (on the left); overconsumption

Consider the two market (supply-and-demand) diagrams below. ______ provides a graphical representation of a positive externality, where ______.

Figure B (on the right); social benefits exceed private benefits In the presence of a positive externality, social benefits exceed private benefits leading to underconsumption of the market good: It may help to recall that in the case of herd immunity, a classic example of positivity externality, the social gain from each vaccination is greater than the private gain from that vaccination because every time an individual is vaccinated against an infectious disease, she protects herself and everyone else around her. In general, demand curves reflect the benefit of consuming a good, and supply curves reflect the cost of producing it. In the presence of a positive externality, we can draw a new social demand curve from the point of view of society or a social planner that is higher than the private demand curve.

Which of the following statements about the production possibilities frontier in the Grossman model is (are) TRUE?

In the Grossman model, consumption points with high Z and low H are not attainable and should not be included on the frontier (PPF on the right)

An individual faces healthy-state income IH, sick-state income IS, and a known probability of illness p = 1.0. Given this information, what is the individual's expected income E[I] this year?

Income is CERTAIN: [E]=Is In this example, the individual knows with certainty that she will be ill (p = 1.0) and receive sick-state income IS. Thus, income is CERTAIN: E[I] = IS

Which of the following statements about price rationing is (are) FALSE?

Price rationing can answer two fundamental questions that every economy faces: "How much health care should be produced?" and "Who should get it?" Price rationing helps markets allocate resources efficiently; scarce resources will go to those individuals willing and able to pay the most for them. Price rationing can deprive low-income people of valuable care Price rationing can reduce the amount of wasteful medical procedures by dissuading low-benefit patients from waiting in the queue NONE are false

Peanut butter and Jelly are typically consumed ______ and as such are though of as ______ goods.

TOGETHER; complement

TRUE/FALSE: Adverse selection is not an issue in health care systems that follow the Beveridge model because all citizens are automatically enrolled in free public insurance.

TRUE

TRUE/FALSE: Nearly half of expenditures on health care in the US are government financed.

TRUE

TRUE/FALSE: The compulsory nature of insurance enrollment in Bismarck systems prevents the worst of adverse selection because it guarantees that there are always healthy people paying into the system to subsidize care for the sick.

TRUE

The RAND HIE finds that higher co-insurance rates lead to lower levels of both effective and ineffective medical utilization.

TRUE

TRUE/FALSE: If people paid full prices for health care, we would not need to measure QALYs and the value of a life year because customers would make socially optimal decisions on their own.

TRUE. Moral hazard justifies cost-effectiveness analysis, which in turn necessitates research into quality weights and life valuation ← moral hazard is the reason for this research

TRUE/FALSE: Barriers to care erected by managed care organizations, such as requiringpatients to visit gatekeeper physicians prior to seeking specialist care, can increase consumer welfare.

TRUE. If managed care tactics effectively combat moral hazard, they can increase consumer welfare because there is less wasteful care for consumers to finance.

The market for lemonade is initially in equilibrium. Temperatures soar during the month of July. At the same time, Harris Teeter runs a promotion on lemons, lowering the price from $1.79 to $0.99/lb. How will the changing market conditions affect the EQUILIBRIUM PRICE of lemonade?

The change in equilibrium price is ambiguous (we don't have enough information to be certain

Based on the production possibilities frontier (PPF) and indifference curves below, Rob's optimal combination of goods is ______.

The optimal combination of birds and crabs is identified at the point where Rob's PPF is tangent to (touching but not intersection) one of his indifference curves. Rob enjoys the highest possible level of utility when he traps and consumes 15 birds and 70 crabs.

Each theory to explain socioeconomic health disparities outlined in Chapter 4 of the BHATTACHARYA textbook has supporting (empirical) evidence.

True

TRUE/FALSE: An ICER value indicates which of two treatment options is better.

`FALSE. The ICER by itself does not indicate which treatment is optimal; it simply indicates exactly how expensive a health improvement is in monetary terms. An ICER is a positive fact about costs and benefits of two different treatments, not a normative judgment about whether a better treatment is worth the extra cost.

Private insurance mandates reduce the problem of ______ at the cost of ______.

adverse selection; choice (personal liberty)

SELECT THE BEST ANSWER FROM THE CHOICES BELOW: Monitoring programs limit moral hazard by ______.

confronting information asymmetry Insurers cannot alter customers' price sensitivity (which is a property of their demand functions), but they do have ways to reduce the price distortion due to insurance (i.e. cost sharing) and to confront information asymmetry(i.e. monitoring programs).

A negative externality occurs when a [x] spills over.

cost Externalities occur when some of the costs or benefits of a transaction fall on someone other than the producer or the consumer: A negative externality occurs when a cost spills over. A positive externality occurs when a benefit spills over.

IN THE FIGURE BELOW, 1 QALY is valued at $100,000. If, instead, the value of each quality-adjusted life year was valued at $850,000, the slope of the indifference curves would be ______ and the most cost-effective treatment would be ______.

flatter; Treatment H

The economics of health and health care is different from the economics at work in other, smaller markets because ______.

health is contagious the demand for health care is highly uncertain health insurance is ubiquitous (very common)

An individual who is relatively PATIENT will have a ______ discount factor δ and a ______ discount rate r.

high (i.e. δ close to 1); low A patient individual has a high discount factor (i.e. δ close to 1) and a low discount rate

Summers in Columbia are (famously?) HOT. During a heat wave, we expect that the demand for lemonade will ______.

increase (the demand curve will shift outward)

If rapidly increasing medical care expenditures can be explained by ______, then this trend does in fact harm health care consumers.

increases in price P

A(n) ______ shows combinations of the two goods that give the individual the same utility.

indifference curve

Economics is the study of the allocation of _____ to satisfy ______.

limited resources; unlimited wants

Because it undermines the core tenet of social solidarity, Beveridge countries use ______ sparingly.

price rationing

Government can play a role in encouraging positive externalities by ______ goods or services that generate spillover benefits.

providing subsidies for

TRUE/FALSE: Adverse selection may occur only in the presence of information asymmetry.

true Adverse selection refers to the oversupply of low-quality goods, products, or contracts when there is asymmetric information.

Which of the following statements about the illness avoidance function is (are) TRUE?

-A careful examination of the illness avoidance function shows that there is a point on the x-axis () such that the individual is sick for the entire period (), with no time left to work, play, or even seek medical care. -The downward slope of the illness avoidance function reflects a key feature of the Grossman model: health is an input to the production of productive time (as health H improves, TS falls and the individual has more productive time TP available). -In the Grossman model, there are diminishing marginal returns to productive time from health. An examination of the illness avoidance function shows TS falls as health improves, but the effect of better health on TS also shrinks as health improves.

Which of the following statements about fair insurance contracts is (are) TRUE?

-A fair insurance contract is defined by the equation r = pq. -The price of a fair insurance (i.e., the premium r) is equal to the expected payout. -The purchase of a fair insurance contract has no effect on the individual's expected income E[I]. The terms of a FAIR insurance contract are such that the price of insurance is equal to the expected payout: r = pq. The purchase of a FAIR insurance contract has no effect on E[I], the individual's expected income. On average, a FAIR insurance contract will earn the insurer zero economic profits. Under a FAIR insurance contract, both the individual and the insurer will break even on average. This is why we say the contract represents a fair bet.

Which of the following statements about partial insurance contracts is (are) TRUE?

-A partial insurance contract is defined by the equation q < IH - IS. -Under a partial insurance contract, final income is state dependent. -A partial insurance contract reduces (but does not eliminate) the financial uncertainty faced by the individual. he terms of a PARTIAL insurance contract are such that the payout less than the difference between the individual's healthy-state and sick-state incomes: q < IH - IS. Under a PARTIAL insurance contract, final income will depend on whether the individual ultimately remains healthy or falls ill. When final income depends on the individual's health state, we say that income is state dependent. Financial uncertainty is reduced (IH' and IS' will be closer together than IH and IS) under a PARTIAL insurance contract; however, financial uncertainty is NOT eliminated.

Which of the following statements about differentiated product oligopoly is (are) TRUE?

-Differentiated product oligopoly markets fall somewhere between perfectly competitivemarkets and monopolies -Differentiated product oligopoly is a model of competition in which there are few firms as a result of barriers that restrict entry and in which the products supplied by firms are not perfect substitutes for each other. -Economists model the hospital market as a differentiated product oligopoly. -Under a differentiated product oligopoly, firms wield some market power.

what is true about indifference curves?

-Typical indifference curves are downward sloping and bowed toward the origin. -A set of indifference curves can be used to summarize and represent consumer preferences. -When comparing bundles of goods that lie on the same indifference curve we say the consumer has no preference for one over another.

Which of the following statements about prospective payments is (are) FALSE?

. Prospective payment schemes create incentives for physician-induced demand.

In YEAR 0, the price of health care ph = $1.50, while the price of other goods pc = $1.50. At these prices, you demand 30 units of health care and 35 units of other goods. In YEAR 1, health care becomes cheaper at ph = $1, while other goods become more expensive at pc = $2. Calculate the Laspeyres price index, that is the amount of money you need to buy the YEAR 0 bundle in YEAR 1, divided by the money you paid for it in YEAR 0.

1.025

According to a 2013 study, high-risk patients should avoid seeking treatment at hospitals associated with medical schools (aka "teaching hospitals") whenever possible.

FALSE A high-risk patient is likely better off in a teaching hospital for most of the year. JULY is an exception But even in July, high-risk patients treated in teaching hospitals face the same risk of death as high-risk patients treated in non-teaching hospitals (around a 23% chance).

The price of curing Hodgkin's disease has risen substantially between 1950 and 2000.

FALSE FALSE. In the 1950s, the price of a cure was effectively infinite, but now it is finite (if expensive). Treating Hodgkin's lymphoma, on the other hand, has gotten much more expensive because so many new treatment options have become available.

TRUE/FALSE: Moral hazard will occur if and only if at least one of the following three conditions is present: price distortion, information asymmetry, or price sensitivity.

FALSE Moral hazard will occur if and only if ALL THREE of the following conditions is present: price distortion, information asymmetry, and price sensitivity.

TRUE or FALSE: Hospital admission rates in the United States increased dramatically between 1990 and 2010.

FALSE Per capital hospitalization rates in the U.S. dropped sharply over the period 1990 to 2010. In 1990, there were about 13,800 hospitalizations per 100,000 people in the United States. In 2010 there were only 12,549 hospitals per 100,000 people. This decline happened despite an increase in the average age of the American population.

TRUE/FALSE: The amount of social loss depends only on the extent of price distortion (i.e. the fullness of the insurance contract).

FALSE The amount of social loss depends on the extent of price distortion and the extent of price sensitivity.

TRUE/FALSE: If Medicare patients in Boston are paying more per capital for a hip replacement than Medicare patients in Boise for the same procedure, but health outcomes are exactly equal, then this is evidence that Boston is wasteful in their health spending.

FALSE There could be an alternative explanation: Boston may have a lower health production function than Boise does and therefore may need to spend more money in order to reach the same level of health as Boise.

TRUE/FALSE: The primary sources of funding for Medicaid are payroll taxes (paid by workers),and premiums, deductibles, and copayments (paid by patients).

FALSE. Medicaid is designed to be free or nearly free for its patients, so it is almost entirely financed by taxpayers.

TRUE or FALSE: The Dartmouth Atlas research project finds that health care spending varied widely between different American cities in the early 2000s, and that Medicare enrollees in high-spending cities were a lot healthier as a result.

FALSE. The Atlas does show wide variation in spending levels, but it also finds that more expensive treatment did not tend to result in better outcomes.

TRUE/FALSE: Medical experts are ideal candidates for providing estimates of the quality weights associated with various health states.

FALSE. While using medical experts to provide such estimates is appealing because the experts have taken care of many patients with the given disorder and observed their quality of life, this method is prone to weigh the concerns of doctors over the concerns of patients. For instance, patient comfort may be overlooked in so-called "Delphic" estimates of quality weights.

Under the Bismarck model of managed competition, multiple nonprofit insurance funds offer health insurance in a nationwide market that is constrained by four major rules. Which of the following is NOT a feature of managed competition in health insurance markets?

Insurers charge different premiums to different customers based on their individual risk of needing health care.

The ______ model best describes hospital-physician relationships in most hospitals in the United States.

Physician's Workbench First described by Harris (1977), the "physician's workbench" model in which hospitals provide a place for physicians to do their work but do not directly employ them describes most American hospitals reasonably well.

An individual faces healthy-state income IH, sick-state income IS and probability p = 0.75 of falling ill. On the income-utility diagram below, the individual's expected utility E[U(I)] is marked by ______ on the y-axis.

Point C If income is uncertain, expected utility E[U(I)] is a random variable. This means that the specific level of utility - which, in our model, depends only on the individual's (uncertain) income - cannot be predicted with 100% certainty. To locate E[U(I)]0.75 on the income-utility diagram, you should trace a straight line from the individual's expected income E[I]0.75 upward until you reach the straight, dashed line connecting U(IS) and U(IH). This value corresponds to Point C on the y-axis. Point B on the y-axis corresponds the the individual's utility of expected income U(E[I]). Remember, this is the level of utility the individual enjoys if somehow guaranteed an income equal to E[I]0.75.

You have just graduated from college and must now decide on your future career. Two career options, along with your salary in each of three earning periods, are presented in the table below. Calculate the net present value (NPV) of your lifetime earnings as a ski instructor. Assume your discount factor . Assuming you would derive the same enjoyment teaching tots to "French fry" and "pizza" on the slopes as you would treating their runny noses, which career should you choose?

Ski Instructor Feedback: If you expect that the two careers would bring you the same enjoyment, you should base your decision on a comparison of the NPV of lifetime earnings. To calculate the net present value of lifetime earnings (when there are three earnings periods), we use the formula:

TRUE/FALSE: In the U.S. Medicare program, by statute, the government is not permitted to take cost-effectiveness criteria into account when deciding whether to cover new medical technologies.

TRUE. Medicare must pay for any treatment that is "safe, effective, noninvestigational,and appropriate" - cost is not taken into account.

TRUE/FALSE: Medicare Part D, which was implemented in 2006, is the federal insurance program for the elderly in the US that provides for prescription drug coverage.

TRUE. Parts A, B, C are concerned with hospital and outpatient coverage,not drug coverage.

According to the Coase theorem, resources will be used efficient to maximize social welfare, even in the face of externalities, provided ______.

The Coase theorem comes with TWO important prerequisites: in order for the social optimum to be guaranteed, we need BOTH well-defined property rights AND low transaction costs.

Based on the production possibilities frontier (PPF) and indifference curve map below, which of the following statements is (are) true?

The individual's optimal consumption bundle includes a higher level of H than POINT C but a lower level of health H than POINT D The individual prefers POINT D to POINT C because POINT D will fall on a higher indifference curve. POINT F is the individual's optimal consumption bundle because it bring the individual the highest level of utility. We know from LECTURE-01: Scarcity and Consumer Choice Higher indifference curves (further from the origin) represent higher levels of consumer satisfaction (aka utility). We can identify the individual's optimal consumption bundle (H, Z) by finding the point where the PPF is tangent to (just touching, but not intersecting) one of his indifference curves.

According to the efficient producer hypothesis, health disparities exist because better-educated individuals are more efficient producers of health than less-educated individuals.

True Feedback: Correct. According to the efficient producer hypothesis, health disparities exist because better-educated individuals are more efficient producers of health than less-educated individuals

Producer surplus is the difference between a seller's cost to produce a good and the amount a seller is actually paid for it (market price) and is represented by the area ______.

above the supply curve and below market price

The Bismarck model has three defining features: ______

community rating regulated private health care provision universal insurance The Bismarck model has three defining features: Universal insurance: All or nearly all of the population have health insurance coverage either through a plan sponsored by an employer or through the government. While the employer-sponsored health insurance schemes tend to be nominally private, they are heavily regulated by the government. Community rating: The financing of health insurance coverage is primarily through payroll and other taxes, rather than through insurance premiums based on the health risk of the insured person. This sort of financing arrangement means that healthier people in the population with low expected medical spending subsidize the care of the sicker people who have high expected medical spending. Regulated private health care provision: Hospitals tend to be privately run, and physicians are not public employees. However, prices in the medical care sector are set by the government in consultation with doctors and hospital managers.

A peanut shortage causes the price of peanuts - along with theprice of peanut butter - to increase by 40%. As a result, we expect demand for jelly to ______ .

decrease (the demand curve will shift inward)

Assume that the demand for MRI scans is less elastic than the demand for Band-Aids. If (in the market graph below) the demand for MRI scans is represented by demand curve D2, the demand for Band-Aids is best represented by ______.

demand curve D1

According to the ______, health disparities exist because the rich have more resources available to invest in health.

direct income hypothesis

The Grossman model predicts that an individual with a higher ______ will optimally choose a higher level of health.

discount factor δ

When the price of fresh tomatos decreases by 10%, the quantity demanded of fresh tomatos increases by 46%. Calculte the price elasticity of demand for fresh tomatos.

e = % change in quantity demanded ----------------------------------------- % change in price -4.6 All else equal, the quantity demanded of a good falls when the price of a good rises (The Law of Demand). The price elasticity of demand will always be negative.

Imagine two individuals are identical in every way EXCEPT for the fact that Individual A is much better at producing health than Individual B. According to the ______, we expect Individual A to have ______ compared to Individual B.

efficient producer hypothesis; an expanded PPF and higher optimal level of health H*

In the presence of ______, the market equilibrium (without intervention) will fail to reach an efficient outcome.

either a positive externality or a negative externality

Researchers studying real world insurance markets have reported ______.

evidence of a positive risk-coverage correlation no evidence of a positive risk-coverage correlation evidence of a negative risk-coverage correlation

Sometimes, costs or benefits may spill over to a third party not directly involved in the transaction. These spillover costs and benefits are called [x].

externalities

The Beveridge model has three defining features: ______.

free care universal, single-payer insurance public health care provision he Beveridge model has three defining features: Universal, single-payer insurance: All citizens automatically receive insurance coverage through the government. This insurance is financed through taxes rather than premiums, so no one has to pay anything to enroll. Public health care provision: The government runs hospitals and clinics, and hires doctors, nurses, and managers to provide care. The government determines when and where hospitals will be built or expanded, and decides how many doctors and specialists will be working at each hospital. Free care: Care is provided for free (or at very low cost) at government hospitals and clinics. Patients are not responsible for any premiums, deductibles, or coinsurance. There are exceptions for certain kinds of care (typically prescription drugs, eye care and dentistry).

Several reasons have been outlined for why adverse selection is not omnipresent (i.e. a serious problem in all markets for health insurance), including _____.

insurance customers misperceive their own risk customers do not act on their private information insurers can accurately observe consumers' risk Less risky people are more risk-averse, wealthier, or better able to understand the benefits of insurance

table 14.3 lists the results of careful cost-effectiveness studies that have determined the costs and associated health effects of each drug. Health effects in this case are measured in terms of life expectancy. Based on the reported costs and health benefits, you conclude ______.

it never makes sense to use Drug I 1.TRUEDrug B is a dominated by Drug A. Drug A is both cheaper ($40,000 < $80,000) and more effective (1.0 year > 0.2 year). Drug B is never an optimal treatment choice.2.TRUEIt never makes sense to use Drug I. Drug H yields the same benefit (3.4 years) at a much lower cost ($360,000 < $400,000).3.FALSEDrug F is NOT a potentially cost-effective treatment, because Drug F is dominated by Drug E.4.FALSEThis method for comparing drugs is incorrect. Comparing the average cost-effectiveness ratio (cost per extra year of life) will not typically reveal all the cost-effective drugs.

he demand for wifi-enabled robot vacuums is more elastic than the demand for lifesaving epinephrine. In the figure below, the market for epinephrine is best represented by the graph on the ______ while the market for iRobot vacuums is best represented by the graph on the ______.

left; right The price elasticity of demand is related to the slope of the demand curve

Models of information asymmetry predict ______.

market collapse (without an inducement to keep low-risk types in the market) bulk markups a positive correlation between risk and coverage

We expect the demand for preventive care (like the flu vaccine) to be ______ than the demand for emergency room care.

more elastic (more price sensitive)

When demand for a good is ______, insurance coverage will result in more social loss.

more price sensitive (i.e. when the demand curve appears more horizontal)

Is a health insurance premium something you must pay every month, regardless of whether you use health care services, or do you only have to pay your health insurance premium during months when you use health care services?

must pay every month, regardless of whether you use services

In a 2010 article published in Health Affairs, Lawrence Baker reports that after orthopedists and neurologists acquired their own imaging equipment (and could start billing for MRI scans), they ordered substantially more MRI procedures. These findings provide empirical evidence of ______ in health care markets.

physician-induced demand This is an example of physician-induced demand: practice patterns (use of diagnostic MRI imaging technology) changed with physicians' financial incentives. The ability to bill for and profit from MRI scans led doctors to order them more often.

Universal public (single-payer) insurance is associated with each of the following EXCEPT ______.

reduced equity

The RAND HIE provides empirical evidence of adverse selection in health insurance because ______.

researchers 1- found that families with the highest anticipated health expenditures were significantly more likely to state that they would choose to purchase the supplementary insurance AND 2- were not able to predict HIE participants anticipated expenditures using observable demographic and economic characteristics

Ex ante moral hazard refers to ______.

risks that people with health insurance take with their health that similar uninsured people do not behavior changes that occur before an insured event happens and make that event (i.e. you ending up in the clinic or hospital) more likely

By placing a monetary value on each QALY, we implicitly create a(n) ______.

set of indifference curves

Government can play a role in reducing negative externalities by ______ goods when their production generates spillover costs.

taxing

Which of thw following is the best definition of the term "health insurance premium?"

the amount of health insurance companies charge each month for coverage

CHECK ALL THAT APPLY: Table 6.1 (below) shows surgical mortality rates (i.e. the chance of dying) associated with five procedure types across hospitals of varying size. This figure highlights ______.

the observed positive correlation between the number of procedures performed (volume) and patient outcomes the fact that the strength of the volume-outcome relationship in hospitals varies dramatically across different procedure types (picture of table)


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