Deck 10: The Policy Analysis Process: Evaluation of Economic Viability

Question 1

Which of the following is the first step in the CBA/CEA process?

A) Agree on the delivery system.
B) Define the health care issue.
C) Deal with uncertainties.
D) Identify financing methods.

Answer 1

B

Question 2

When defining the health issue, which of the following is one of the things the team must focus on?

A) Conducting a quantitative analysis
B) Exploring the financing options
C) Implementing programs
D) Identifying the affected population

Answer 2

D

Question 3

Which of the following refers to the relevant change in effectiveness associated with an intervention?

A) Marginal change
B) Decay rate
C) Borderline change
D) Substantial change

Answer 3

A

Question 4

A proposal that does not increase the overall costs to the agency is considered:

A) cost effective.
B) cost neutral.
C) marginal.
D) a cost burden.

Question 5

Which of the following would consider the benefits of a program in terms of the number of lives saved?

A) Return on investment
B) Cost-benefit analysis
C) Cost-effectiveness analysis
D) Internal rate of return

Question 6

Analysis of health care services based on supply and demand is complicated by the fact that:

A) demand is generated from more than one source.
B) it is difficult to define "supply."
C) if prices are modified, the entire process must be repeated from scratch.
D) it is impossible to make estimates of the impact of price changes.

Question 7

Which of the following is TRUE of the standard gamble approach?

A) Many criticize it as being a poor measure of preferences.
B) It is largely unrelated to a person's risk tolerance.
C) It is an indirect measure of preferences.
D) It is a direct measure of preferences.

Question 8

An assessment asks respondents how many months of life they would be willing to give up to achieve a more desirable outcome. This is an example of which of the following?

A) An indirect measure
B) The standard gamble approach
C) The time trade-off approach
D) A generic utility instrument

Question 9

Weinstein and Stason noted that a key issue with cost-benefit analysis in health care is that:

A) it is too subjective.
B) it necessitates putting a dollar value on life and health.
C) health care cannot be measured using any one metric.
D) it puts too little emphasis on expenses.

Question 10

Which of the following uses lost labor productivity as a measurement?

A) Proxy approach
B) Human capital approach
C) Benefit-cost concept
D) Standard gamble approach

Question 11

An organization wants to maximize its benefit-cost ratio, getting the most benefit for a given sum of money. This is a basic tenet of which of the following?

A) Relevant costing
B) IRR
C) Cost-effectiveness
D) Monte Carlo simulation

Question 12

Fixed costs that apply only over a specific volume range are called:

A) step-variable costs.
B) unanticipated costs.
C) aggregate costs.
D) marginal costs.

Question 13

Why is the aggregate cost method not recommended for health care costing?

A) It is too complicated.
B) It can introduce ethical dilemmas.
C) It does not take into account how costs change with volume.
D) It takes costing across all units into account, which often introduces confusion.

Question 14

The Monte Carlo simulation technique is an example of which of the following?

A) Aggregate costing
B) A way to determine semi-fixed costs
C) An uncertain method of analysis
D) Sensitivity analysis

Question 15

The question of whether money will lose its purchasing power in the future due to inflation is a component of which of the following?

A) Aggregate costing
B) QALY estimates
C) Time value of money
D) Discounting

Question 16

The discount rate at which the NPV is 0 is the:

A) IRR.
B) inflation effect.
C) benefit-cost ratio.
D) comparison rate.

Question 17

The _____ is often the first thing that's determined in sensitivity analysis.

A) CPI
B) IRR
C) QALY estimate
D) inflation rate

Question 18

In what way are ratios useful?

A) They are useful when compared to a minimum standard value.
B) They can stand alone, providing vital information for financial analyses.
C) They are often used by outside vendors to prove a program's worth.
D) They ensure that a program does not stray too far from the status quo.

Question 19

According to Cleverly and Cameron, it is equally important that public- and private-sector financial systems:

A) establish the preferred capital structure based on debt capacity.
B) provide processes for allocating capital to competing internal programs.
C) supply ROI or IRR estimates for decision making.
D) allow for stakeholder feedback when concerns arise.

Question 20

Small organizations especially have to worry about:

A) discrimination in hiring.
B) competition.
C) working capital requirements.
D) executive compensation.

Question 21

Estimates, such as that of the effectiveness of a process, are sometimes revised once the process is better defined and understood.

Question 22

Private-sector organizations most often use cost-effectiveness analysis when evaluating and comparing investment opportunities.

Question 23

Basic economic tools, such as supply and demand analysis, are often used by health care professionals.

Question 24

A major challenge in maximizing utility is that it is difficult to measure and compare utility across individuals.

Question 25

In cost analysis, it is best to begin by discussing monetary costs.

Question 26

The estimated monetary value of QALY can vary dramatically depending on the type of analysis that is used.

Question 27

Because health care inflation rates are high, health care costing analyses tend to be especially sensitive to the inflation effect.

Question 28

The ACA incorporated only three of the general methods for rectifying health care maldistribution.

Question 29

It is less important for governmental programs to estimate cash flows and reserves than it is for organizations operating in the private sector.

Question 30

Financial decisions never involve a "zero-sum" game.