Question 1

A risk-averse individual prefers to pay certain modest costs in exchange for possible unforeseen high costs.

Accepted Answer

A risk-averse individual seeks to avoid uncertainty and potential losses, and is willing to pay a known cost (such as insurance premiums) to protect against unknown or potentially high costs in the future.

Question 2

Health care expenditures in the U.S.are projected to be 20% of GDP by 2026.

Accepted Answer

According to the Centers for Medicare and Medicaid Services, health care expenditures in the U.S. are projected to reach 20% of GDP by 2026.

Question 3

Third-party payments for health care services increase the quantity of health care demanded by reducing out-of-pocket costs to patients.

Accepted Answer

Third-party payments, such as insurance, can decrease the cost of healthcare for patients, making healthcare services more affordable and increasing the quantity of healthcare services demanded.

Question 4

Medicare is a government program of health insurance for the elderly.

Accepted Answer

Medicare is a government-funded program of health insurance for individuals aged 65 and above. It also covers people with certain disabilities and those with permanent kidney failure requiring dialysis or transplant.

Question 5

Medicaid costs are paid entirely by the federal government.

Accepted Answer

While the federal government does provide significant funding for Medicaid, the costs are shared between the federal government and states. The percentage of costs covered by the federal government varies by state.

Question 6

Under national health insurance in Great Britain, the price system is used to ration health care.

Accepted Answer

In Great Britain's National Health Service (NHS), health care is not rationed through the use of prices. Instead, it is provided to all citizens regardless of their ability to pay, with the goal of ensuring equal access to health care services.

Question 7

Asymmetric information in the market for health care occurs when sellers of medical care are better informed about cost and quality of care than buyers.

Accepted Answer

Asymmetric information means there is a difference in information between the buyer and the seller. In the market for health care, doctors and hospitals have more information about the cost and quality of care they provide than patients, making it difficult for patients to make informed decisions about their health care.

Question 8

An increase in coinsurance and deductibles for health insurance can contribute to a reduction in expenditures on health care.

Accepted Answer

When coinsurance and deductibles are increased, individuals are forced to pay more out of pocket for their health care expenses. This can lead to a decrease in the utilization of health care services and ultimately result in lower expenditures for health care overall.

Question 9

Since 1960, expenditures on health care as a percent of GDP has:

Accepted Answer

Expenditures on health care as a percent of GDP have more than tripled since 1960, which means that we are spending a greater portion of our economic output on healthcare now than we were 60 years ago.

Question 10

Government spending on health care is declining as a percent of total government spending.

Accepted Answer

According to the World Health Organization, government spending on health care has been increasing globally and is projected to continue to do so. Therefore, the statement is false.

Question 11

Individuals in the United States, on average, pay 50 percent of their health care costs out-of-pocket, and the remaining 50 percent is paid by insurance, governments, and charity.

Accepted Answer

According to data from the Centers for Medicare and Medicaid Services, in 2018, individuals in the United States paid approximately 11 percent of national health spending out-of-pocket, while insurance covered 66 percent, and government and public programs covered 23 percent. Charity and other private funds accounted for the remaining percent. Therefore, the statement in the question is false.

Question 12

Because of third-party payment for services in the market for health care, the price paid by buyers is less than the payment sellers receive, and the marginal social cost of health care exceeds its mar?ginal social benefit.

Accepted Answer

Third-party payment in the health care market leads to a principal-agent problem where the buyer (patient) is not paying the full cost of the service, resulting in overconsumption and an inefficient allocation of resources. This means that the marginal social cost of health care (including the negative externalities of overconsumption) exceeds its marginal social benefit, indicating market failure.

Question 13

In the United States the government pays the health bills of 90 percent of the population.

Accepted Answer

The government does not pay the health bills of 90 percent of the population in the United States. The majority of people have private health insurance through their employer, and there are also individual plans available on the marketplace. Some individuals may receive government-funded health insurance programs such as Medicare or Medicaid, but this only accounts for a portion of the population.

Question 14

Approximately 18 percent of GDP was allocated to provision of health care in the United States as of 2016.

Accepted Answer

According to the Centers for Medicare & Medicaid Services (CMS), approximately 18 percent of GDP was allocated to provision of health care in the United States in 2016.

Question 15

Asymmetric information can occur when the provider of a service is better informed than the consumer of the service.

Accepted Answer

Asymmetric information refers to a situation in which one party in a transaction has more or better information than the other party. In the case of a service provider and consumer, the provider may know more about the quality or effectiveness of the service they are offering, which can lead to information asymmetry.

Question 16

As of 2019, the American system of health care is being financed by a mix of private and government insurance programs that pay over 90 percent of the health care bills for U.S.citizens.

Accepted Answer

According to the Centers for Medicare and Medicaid Services, in 2017, private insurance and government programs (such as Medicare, Medicaid, and CHIP) paid for approximately 90% of total national health expenditures in the United States. This suggests that as of 2019, the American health care system is still being financed by a mix of private and government insurance programs.

Question 17

Spending per person on health care in the United States is less than in the United Kingdom, where national health insurance finances health expenditures.

Accepted Answer

The statement is false. Spending per person on health care in the United States is actually higher than in the United Kingdom.

Question 18

Exclusion of employer-provided health insurance to employees is an indirect subsidy to private provision of health insurance.

Accepted Answer

Exclusion of employer-provided health insurance from taxation creates a tax advantage for employers who offer health insurance as a benefit to their employees, thus indirectly subsidizing and promoting private provision of health insurance.

Question 19

Most of the medical bills of Americans in the United States are paid by:

Accepted Answer

According to the National Center for Health Statistics, approximately 90% of Americans have health insurance coverage and the majority of the medical bills are paid by private and government health insurance.

Question 20

Half of Americans do not have health insurance coverage.

Accepted Answer

According to a Census Bureau report from 2019, the percentage of Americans without health insurance was 8.9%, which is less than half of the population.

Quiz 9: Government and Health Care