Question 1

"Cost disease" refers to the tendency for high productivity in the service sector to lead to lower costs in those industries.

Accepted Answer

"Cost disease" actually refers to the phenomenon where the cost of industries with low productivity (such as healthcare, education, and the arts) increase over time relative to industries with high productivity (such as manufacturing), leading to difficulties in funding those sectors.

Question 2

The rising cost of uninsured patients receiving treatment at hospital emergency rooms is one of the leading causes of the increase in health care spending as a percentage of GDP in the United States.

Accepted Answer

The answer of The rising cost of uninsured patients receiving...

Question 3

If consumers paid the full price of medical services instead of using health insurance and third-party payers to cover part of the cost,the quantity of medical services provided would increase.

Accepted Answer

The statement is not necessarily true. Without insurance and third-party payers, many consumers may not be able to afford the full cost of medical services and may choose to forgo or limit their use of medical services. Thus, the quantity of medical services provided may actually decrease.

Question 4

Under the Patient Protection and Affordable Care Act (ACA),individuals who do not have health insurance will be subject to a fine.

Accepted Answer

This is true. The ACA includes an individual mandate requiring all individuals to have health insurance or face a penalty (also known as a fine) on their taxes. However, the penalty was repealed beginning in 2019 through the Tax Cuts and Jobs Act.

Question 5

Those who favor changes in the market for health care that would make it more like the markets for other goods and services are generally in favor of universal health care coverage.

Accepted Answer

Those who favor changes in the market for health care that would make it more like the markets for other goods and services usually argue against universal health care coverage, instead advocating for a more market-based solution with less government intervention.

Question 6

About ________ of pharmaceutical patents are issued to U.S.firms.

Accepted Answer

According to a report by the International Trade Commission, two-thirds of pharmaceutical patents issued between 2000 and 2019 were granted to U.S. firms.

Question 7

The individual mandate provision of the ACA requires

Accepted Answer

The individual mandate provision of the ACA (Affordable Care Act), also known as Obamacare, requires every U.S. resident to have health insurance. This is aimed at expanding the number of people covered by health insurance and reducing the cost of healthcare for individuals and the government. It penalizes individuals who do not have health insurance with a tax penalty, except in certain circumstances, such as religious objections or financial hardship.

Question 8

"Cost disease" refers to the tendency for low productivity in the service sector to lead to higher costs in those industries.

Accepted Answer

Cost disease is a real economic phenomenon, first identified by economist William J. Baumol, where the productivity in service-based sectors of the economy, such as education and healthcare, has remained low over time, leading to higher costs in those industries compared to more highly-automated industries with greater efficiency.

Question 9

Under the Patient Protection and Affordable Care Act (ACA),residents who do not have health insurance will not be allowed to seek employment.

Accepted Answer

The ACA requires individuals to have health insurance or pay a penalty, but it does not prohibit those without insurance from seeking employment.

Question 10

Article Summary
Administrative overhead costs resulting from insurance companies handling reimbursement claims is in large part the reason that health care in the United States is much more expensive than in other countries. An analysis on the administration costs of health care in the United States found that roughly 30 percent of the costs of health care are administrative and that more than 25 percent of health-sector employees work in administration. Health insurance companies are often paid a fixed percentage of the claims they administer, which gives them little to no impetus to increase efficiency and keep costs down.

-Refer to the Article Summary.Even if insurance companies were more efficient and brought administrative costs down,consumers would ________ the full cost of medical treatment.This would result in the market equilibrium price and quantity of medical services being ________ than the efficient equilibrium price and quantity.

Accepted Answer

The answer of Article Summary
Administrative overhead costs resulting from insurance...

Question 11

Since 1960,out-of-pocket spending on health care has increased sharply as a fraction of all health care spending.

Accepted Answer

The answer of Since 1960,out-of-pocket spending on health care has...

Question 12

Replacing employment-based health care with a government-run system could reduce employers payments for their workers insurance,but the amount that they would have to pay in overall compensation

Accepted Answer

Replacing employment-based health care with a government-run system might shift the form of compensation (from health insurance to possibly higher wages or other benefits) but the overall compensation cost to employers would likely remain essentially unchanged. Employers would still need to offer competitive compensation packages to attract and retain employees.

Question 13

Under the Patient Protection and Affordable Care Act (ACA),insurance companies will be required to participate in a high-risk pool that will cover individuals with pre-existing medical conditions.

Accepted Answer

This is true as part of the ACA's efforts to expand access to healthcare coverage for individuals with pre-existing conditions. The high-risk pool is known as the Pre-Existing Condition Insurance Plan (PCIP) and provides coverage for individuals who cannot obtain insurance elsewhere.

Question 14

By 2013,spending on federal health care programs such as Medicare and Medicaid had grown to 6 percent of GDP.

Accepted Answer

According to the Centers for Medicare and Medicaid Services, spending on federal health care programs reached 6 percent of GDP in 2013.

Question 15

About ________ of research on new medicines is carried out in the United States.U.S.

Accepted Answer

According to data from the Pharmaceutical Research and Manufacturers of America (PhRMA), two-thirds of research on new medicines is carried out in the United States.

Question 16

Economists John Cogan,Glenn Hubbard,and Daniel Kessler have estimated that ________ the tax preference for employer-provided health insurance would reduce spending by people enrolled in these programs by 33 percent.

Accepted Answer

Repealing the tax preference for employer-provided health insurance would eliminate the financial incentive for employers to provide expensive health insurance plans and would encourage individuals to choose more affordable plans, thus resulting in a 33 percent reduction in spending by people enrolled in these programs, according to the economists' estimates.

Question 17

The Congressional Budget Office estimates that the additional taxes and fees enacted under the ACA will be enough to pay for the plan and reduce the federal government's budget deficit.

Accepted Answer

The Congressional Budget Office estimated that the ACA's additional taxes and fees would generate enough revenue to pay for the plan and reduce the federal government's budget deficit.

Question 18

Under the Patient Protection and Affordable Care Act (ACA),every company with more than 200 employees must offer health insurance to its employees and must automatically enroll them in the plan.

Accepted Answer

Under the ACA, employers with more than 200 full-time employees are required to automatically enroll new full-time employees in one of the employer’s health benefits plans, subject to any waiting period authorized by law, and to continue the enrollment of current employees.

Question 19

In most circumstances,employees do not pay taxes on the value of health insurance their employers provide them.

Accepted Answer

Under current US tax law, the value of employer-provided health insurance is not considered taxable income for employees.

Question 20

The rising cost of malpractice insurance is one of the leading causes of the increase in health care spending as a percentage of GDP in the United States.

Accepted Answer

The answer of The rising cost of malpractice insurance is...

Quiz 5: The Economics of Health Care