Question 1

The increased practice of "defensive medicine" is a consequence of

Accepted Answer

A)  professional board licensing requirements.
B)  the threat of medical lawsuits.
C)  incentives given by drug companies.
D)  an Act passed by Congress.E) All of the above
F) None of the above

Question 2

A tax subsidy is involved in employer-financed health insurance because

Accepted Answer

A)  all working adults are covered by Medicare.
B)  all working adults are covered by Medicaid.
C)  employer payments for health insurance are not subject to income or payroll taxes.
D)  corporations that provide health insurance pay lower corporate income tax rates.E) B) and C)
F) A) and B)

Question 3

Employer-provided private health insurance

Accepted Answer

A)  is unique to the United States and not typically found in other countries.
B)  is the most common form of health care provision in industrialized countries.
C)  substantially reduces the cost of health care provision relative to national health insurance schemes.
D)  provides a small percentage of health care spending in the United States.E) A) and B)
F) A) and C)

Question 4

Asymmetric information in the health care market has increased the supply of health care.

Accepted Answer

A) True 
 B)False

Question 5

It is generally agreed that in the long run the cost of private health insurance provided by employers is

Accepted Answer

A)  at the expense of business profits.
B)  at the expense of real wages.
C)  paid by taxpayers through government.
D)  included as taxable income for income tax purposes.E) A) and C)
F) A) and B)

Question 6

Which of the following is a provision of the Patient Protection and Affordable Care Act?

Accepted Answer

A)  Insurance companies may not legally deny coverage to anyone on the basis of a preexisting medical condition.
B)  Every firm must purchase health insurance for their employees or face a $2,000 fine per employee.
C)  Every individual must purchase their own health insurance for themselves and their dependents or pay a fine.
D)  Adult children of parents with employer-provided health insurance can remain covered by their parents' insurance through age 35.E) A) and B)
F) B) and C)

Question 7

When the supplier, not the buyer, of health care services makes most of the decisions about the amount and type of health care to be provided, there is

Accepted Answer

A)  a moral hazard in the health care market.
B)  asymmetric information in the health care market.
C)  a lack of medical ethics in the health care market.
D)  a need for Medicare in the health care market.E) A) and B)
F) A) and C)

Question 8

One special feature about health care services is that society regards them as

Accepted Answer

A)  private goods.
B)  an entitlement.
C)  something to be rationed by price and ability to pay.
D)  normal goods.E) B) and C)
F) None of the above

Question 9

Refer to the demand and supply diagram, which relates to the health care market. The efficiency loss caused by the availability of health insurance is shown by area

Accepted Answer

A)  P₁ abP₂.
B)  abc.
C)  adc.
D)  Q₁ acQ₂.E) None of the above
F) A) and B)

Question 10

Raising the deductibles and copayments is a way of dealing with the

Accepted Answer

A)  adverse selection problem of health insurance
B)  moral hazard problem of health insurance.
C)  asymmetric information between doctors and patients.
D)  externalities of health care.E) None of the above
F) B) and C)

Question 11

"Defensive medicine" means the same thing as "preventive medicine."

Accepted Answer

A) True 
 B)False

Question 12

Roughly what portion of U.S. total health spending is paid for by private and public insurance?

Accepted Answer

A)  one-tenth
B)  one-fourth
C)  four-fifths
D)  one-halfE) A) and B)
F) A) and C)

Question 13

The table gives supply and demand data for a certain elective surgical procedure. If suppliers provide the quantity of health care demanded and insurance pays one-third of the equilibrium price, there would be a resulting allocative

Accepted Answer

A)  efficiency because, at 7,000 units, the marginal cost to society of $3,000 equals the marginal benefit of $3,000.
B)  efficiency because, at 12,000 units, the marginal cost to society is $4,000 and the marginal benefit is $1,000.
C)  inefficiency because, at 12,000 units, the marginal cost to society is $5,000 and the marginal benefit is $2,000.
D)  inefficiency because, at 12,000 units, the marginal cost to society is $2,000 and the marginal benefit is $5,000.E) None of the above
F) A) and C)

Question 14

Whole Foods Market's personal wellness accounts for employees

Accepted Answer

A)  create significant moral hazard in the purchase of health care services.
B)  provide bonus payments for employees meeting certain health criteria and participating in company wellness activities.
C)  encourage employees to consider the opportunity costs of their medical spending.
D)  encourage employees to overspend for health care, as they view it as "free money."E) B) and D)
F) A) and D)

Question 15

Out-of-pocket costs of health care to consumers are mostly in the form of

Accepted Answer

A)  premiums and copayments.
B)  health taxes and premiums.
C)  premiums and deductibles.
D)  copayments and deductibles.E) A) and D)
F) All of the above

Question 16

When economists say that health care services are overconsumed, they mean that

Accepted Answer

A)  rich people buy too much health care and poor people buy too little.
B)  some resources now used in the health care industry could produce alternative goods and services that society values more highly.
C)  health care is being purchased in amounts such that marginal benefits exceed marginal costs.
D)  the price of health care is below equilibrium so that quantity demanded exceeds quantity supplied.E) A) and B)
F) C) and D)

Question 17

The main purpose of HMOs and PPOs is to

Accepted Answer

A)  reduce health care costs for employers and their employees.
B)  reduce medical malpractice suits.
C)  enable groups of physicians to increase their fees.
D)  direct patients to specialists rather than to more expensive primary-care physicians.E) B) and D)
F) C) and D)

Question 18

Sam decides to join the Gigantic State University's rugby team when he learns that his health insurance will pay for any subsequent injury. This illustrates

Accepted Answer

A)  the diagnosis-related-group system.
B)  a "pay or play" system.
C)  the moral hazard problem.
D)  the Coase theorem.E) B) and C)
F) A) and D)

Question 19

Managed-care organizations attempt to control their enrolled members' use of health care as a way of containing costs.

Accepted Answer

A) True 
 B)False

Question 20

The experiences of Singapore, Whole Foods Markets, and the State of Indiana all point to one major factor that could reduce, if not eliminate, overconsumption of health care. And that is

Accepted Answer

A)  reducing the coverage of insured illnesses.
B)  high out-of-pocket costs to consumers.
C)  raising the health-insurance premiums.
D)  privatizing health insurance.E) A) and D)
F) A) and C)

Exam 24: Health Care

It is generally agreed that in the long run the cost of private health insurance provided by employers is

Correct AnswerverifiedShow Answer

Which of the following is a provision of the Patient Protection and Affordable Care Act?

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"Defensive medicine" means the same thing as "preventive medicine."

Correct AnswerverifiedShow Answer

The experiences of Singapore, Whole Foods Markets, and the State of Indiana all point to one major factor that could reduce, if not eliminate, overconsumption of health care. And that is

Correct AnswerverifiedShow Answer

The main purpose of HMOs and PPOs is to

Correct AnswerverifiedShow Answer

The table gives supply and demand data for a certain elective surgical procedure. If suppliers provide the quantity of health care demanded and insurance pays one-third of the equilibrium price, there would be a resulting allocative

Correct AnswerverifiedShow Answer

One special feature about health care services is that society regards them as

Correct AnswerverifiedShow Answer

Managed-care organizations attempt to control their enrolled members' use of health care as a way of containing costs.

Correct AnswerverifiedShow Answer

Sam decides to join the Gigantic State University's rugby team when he learns that his health insurance will pay for any subsequent injury. This illustrates

Correct AnswerverifiedShow Answer

Asymmetric information in the health care market has increased the supply of health care.

Correct AnswerverifiedShow Answer

Out-of-pocket costs of health care to consumers are mostly in the form of

Correct AnswerverifiedShow Answer

When economists say that health care services are overconsumed, they mean that

Correct AnswerverifiedShow Answer

Roughly what portion of U.S. total health spending is paid for by private and public insurance?

Correct AnswerverifiedShow Answer

Whole Foods Market's personal wellness accounts for employees

Correct AnswerverifiedShow Answer

The increased practice of "defensive medicine" is a consequence of

Correct AnswerverifiedShow Answer

Raising the deductibles and copayments is a way of dealing with the

Correct AnswerverifiedShow Answer

A tax subsidy is involved in employer-financed health insurance because

Correct AnswerverifiedShow Answer

When the supplier, not the buyer, of health care services makes most of the decisions about the amount and type of health care to be provided, there is

Correct AnswerverifiedShow Answer

Employer-provided private health insurance

Correct AnswerverifiedShow Answer

Refer to the demand and supply diagram, which relates to the health care market. The efficiency loss caused by the availability of health insurance is shown by area

Correct AnswerverifiedShow Answer

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