Deck 23: The Federal Budget and the National Debt.

Question 1

How does the substitution of third-party payments by insurance companies and the government for the out-of-pocket purchase of health care by consumers influence the demand and price of medical services Explain.

Answer 1

Third party-payment is a system for claims payment where insured individuals are not required to pay the whole cost of health care services at the time of service consumed. An insured patient has no out of pocket cost at the time consuming the health care services.
On the other hand "out of pocket purchase" is the expenses which an individual has to pay to consume health care services, depending on the health care plan.
With the expansion of third party payment system increases the price of health care services. Third party payment system in health care reduces the medical expenses directly paid by the consumer, which leads to decrease the out of pocket payment expenditure on health care services. Third party payment system increases the demand for medical care, which leads to increase in the price of health care services.

Question 2

*When an employer provides health insurance benefits as part of the compensation package, does this represent a gift by employers to their employees Do employees earn these benefits Why or why not Justify your response.

Answer 2

Now these days compensation of an employee also includes the health insurance benefits as a component of compensation package. The worker will be hired unless the employer values his/her services by an amount equal to or greater than the total cost of the employee's total compensation. Consequently, like other components of the workers compensation package, health insurance benefits are also earned by employees.

Question 3

Do individuals have a right to free health care Do they have a right to force others to provide them with free health care Discuss.

Answer 3

In most of the high income countries hospital and other medical services are operated by the government and health care is socialized industry in these countries. Doctors, nurses, and other health care workers are government employees, but it does not mean that health care industry does not have cost in these countries. Most of the time individuals want to seek free health care services free of cost but no country is able do so. Because governments also do have limited resources, which makes them unable to provide free services all the time.

Question 4

*How did the Medicare and Medicaid programs influence the cost of medical services purchased by Americans who were neither poor nor elderly Explain.

Question 5

Consider the six reform proposals suggested by the authors at the end of this feature. Indicate why you believe each is either a good or a bad idea. Explain your answers.

Question 6

*Do personal choices influence health care expenditures If health care is paid for by others or if everyone is charged the same premium for health care, how will this influence the incentive to make healthy lifestyle choices

Question 7

Suppose the government established a new program that would use revenues from a payroll tax to finance 85 percent of the maintenance and repair cost of automobiles incurred by those who are employed. How would this legislation influence (a) the prices of auto repair and maintenance services, (b) total spending on these services, and (c) the cost of this program in the years immediately ahead Do you think this program should be adopted Why or why not

Question 8

*If the government either provides (or forces insurers to provide) insurance to persons with preexisting adverse health conditions, how will this influence the incentive to purchase insurance when you are healthy
*Asterisk denotes questions for which answers are given in Appendix B.