Deck 24: Health Care

Question 1

The major objective of Medicaid is to

A) provide health care services to the aged.
B) provide health care services to those receiving public assistance.
C) contain rising health care costs.
D) make a basic health care package available to all Americans.

Answer 1

provide health care services to those receiving public assistance.

Question 2

In the United States, approximately how many doctors are there per 100,000 population?

A) 162
B) 245
C) 580
D) 5,600

Answer 2

245

Question 3

Approximately how many millions of Americans did not have health insurance coverage in 2015?

A) 24
B) 30
C) 49
D) 63

Answer 3

30

Question 4

When the United States is described as having a dual system of health care, this means that

A) government provides basic health insurance for all Americans and private insurance covers services beyond the basic level.
B) high-quality care is provided in urban areas, but care in rural areas is of poor quality.
C) those Americans with good insurance or substantial wealth receive world-class health care, while those without insurance receive no or low-quality health care.
D) the high-risk segment of the population is required to have health insurance, while the low-risk sector is not.

Question 5

Between 1960 and 2014, U.S. health care spending as a percentage of domestic output

A) more than tripled.
B) more than quadrupled.
C) declined by one-half.
D) remained relatively constant.

Question 6

Employer-provided private health insurance

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.

Question 7

Approximately how many workers are employed in the U.S. health care industry?

A) 650,000
B) 902,000
C) 17 million
D) 12 million

Question 8

Total U.S. health care spending in 2014 was approximately

A) $847 billion.
B) $1.6 trillion.
C) $3.0 trillion.
D) $4.1 trillion.

Question 9

Which of the following statements is true about health care costs in the United States?

A) Costs have risen because increases in the price of health care have more than offset reductions in the quantity of health care provided.
B) Costs have risen because increases in the quantity of care provided have more than offset price reductions realized through economies of scale.
C) Costs have risen because both the price of health care and the quantity provided have risen.
D) Costs have remained relatively stable as price increases have been largely offset by reductions in the quantity provided.

Question 10

Employer-provided private health insurance in the United States has resulted in

A) incentives that encourage the overuse of health care.
B) incentives that discourage the use of health care, and overall poorer health.
C) lower costs of health care as providers better achieve economies of scale.
D) comprehensive coverage of the U.S. population, with few lacking access to adequate health care.

Question 11

The twin problems of the U.S. health care industry are

A) rapidly rising costs and unequal access to health care.
B) declining quality of health care and the duplication of specialized equipment at hospitals.
C) declining per capita spending on health care and the moral hazard problem.
D) the decline in the number of family physicians and the failure to vaccinate children.

Question 12

The major purpose of Medicare is to

A) provide health care services to people on Social Security.
B) provide health care services to those receiving public assistance.
C) contain rising health care costs.
D) make a basic health care package available to all Americans.

Question 13

As a percentage of GDP, U.S. health care spending is

A) higher than that for Germany and Japan but lower than that of the United Kingdom and Sweden.
B) higher than for any other major industrial country.
C) lower than that for Canada.
D) nearly identical to that of the other major industrial nations.

Question 14

In the past several decades, U.S. health care expenditures have

A) risen absolutely but declined as a percentage of GDP.
B) declined absolutely but risen as a percentage of GDP.
C) risen absolutely and as a percentage of GDP.
D) declined absolutely and as a percentage of GDP.

Question 15

Employer-provided private health insurance began in the United States because

A) the rising threat of socialism prompted U.S. companies to provide insurance to dampen enthusiasm for socialist reform.
B) during World War II, wage and price controls forced employers to use nonwage forms of compensation to attract workers.
C) poor health conditions at the beginning of the 20th century prompted the U.S. government to require new companies to offer health insurance to employees.
D) the American Medical Association successfully lobbied the U.S. government to provide subsidies to companies offering private health insurance to employees.

Question 16

The price of medical care in the United States has

A) remained relatively unchanged in recent years.
B) risen slower than the overall price level.
C) risen at the same pace as the overall price level.
D) risen faster than the overall price level.

Question 17

The United States devotes about percent of its gross domestic product to health care (2014).

A) 5.2
B) 8.6
C) 15.3
D) 17.5

Question 18

Aggregate U.S. health care spending in 2014 was approximately

A) 5.2 percent of domestic output (GDP).
B) 13.1 percent of domestic output (GDP).
C) 17.5 percent of domestic output (GDP).
D) 21 percent of domestic output (GDP).

Question 19

As a percentage of GDP, health care spending in the United States has

A) decreased substantially since 1960.
B) increased slightly since 1960.
C) increased substantially since 1960.
D) remained relatively constant since 1960.

Question 20

In 2007, approximately what percentage of people in the United States with private health insurance received it as an employer-provided benefit?

A) 35
B) 50
C) 88
D) 95

Question 21

Which of the following persons is most likely to be insured for health care?

A) a minimum-wage teenager working for a fast-food restaurant
B) a skilled worker employed by a large multinational corporation
C) an unemployed retail clerk
D) a part-time groundskeeper for a small manufacturing plant

Question 22

In industrially advanced countries, estimates suggest the income elasticity of demand for health care is about

A) +3.
B) +6.
C) −2.
D) +1.

Question 23

The price elasticity of demand for health care is

A) perfectly inelastic.
B) relatively inelastic.
C) relatively elastic.
D) perfectly elastic.

Question 24

The fundamental problem associated with the U.S. health care system is that

A) the financing of health care through insurance has resulted in the underallocation of resources to the health care industry.
B) frivolous malpractice suits have increased malpractice insurance premiums for doctors.
C) at the margin, the value of health care services may be less than the value of alternative goods and services.
D) there are too many general practitioners and not enough specialists.

Question 25

The health care market is characterized by

A) extensive negative externalities.
B) significant positive externalities.
C) perfect knowledge by both buyers and sellers.
D) a perfectly inelastic demand.

Question 26

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

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.

Question 27

The perceived central economic problem associated with the U.S. health care system is

A) too many frivolous malpractice lawsuits.
B) an overabundance of scanning machines.
C) an overallocation of resources to the system.
D) that workers lose their insurance when they lose their jobs.

Question 28

The unemployed are disproportionately represented among the uninsured because

A) one must be working to qualify for Medicaid.
B) most workers obtain health insurance through their employers.
C) most are young and in excellent health, so they choose not to purchase health insurance.
D) a large percentage of the unemployed are heads of single-parent families.

Question 29

Given the availability of the Medicaid program, why are so many poor people uninsured?

A) Because only a fixed percentage of the population can participate in Medicaid at any time.
B) Because many poor people earn enough that they do not qualify for Medicaid.
C) Because nonincome requirements screen many poor people from the program.
D) Because only native-born Americans are eligible for the program.

Question 30

Approximately what percentage of U.S. health care spending is financed by public insurance?

A) 18 percent
B) 40 percent
C) 44 percent
D) 57 percent

Question 31

The price elasticity of demand for health care is such that an increase in the price of health care will

A) decrease total health care expenditures.
B) increase total health care expenditures.
C) shift the demand for health care rightward.
D) shift the demand for health care leftward.

Question 32

Based on the available elasticity evidence, health care

A) is an inferior good.
B) is a normal good.
C) is highly elastic with respect to price.
D) has a price elasticity of demand of 1.

Question 33

Health care expenditures coming directly out of consumers' pockets, primarily in the form of deductibles and copayments, account for what percentage of U.S. health care spending?

A) 21 percent
B) 35 percent
C) 44 percent
D) 17 percent

Question 34

Which of the following statements is correct?

A) Limited access to the health care system is a major cause of rising health care costs.
B) Rising health care costs are a major cause of limited access to the health care system.
C) Rising health care costs have forced employers to raise real wages above labor productivity.
D) The tax subsidy that government provides for health care causes health care to be underconsumed.

Question 35

The demand for health care in industrially advanced economies is

A) highly elastic with respect to both price and income.
B) highly inelastic with respect to both price and income.
C) highly elastic with respect to income but highly inelastic with respect to price.
D) about unit elasticity with respect to income and relatively inelastic with respect to price.

Question 36

For many years, the price of medical care in the United States has

A) risen at the same rate as the overall price level.
B) risen at a faster rate than the overall price level.
C) risen, but at a slower rate than the overall price level.
D) fallen.

Question 37

In the health care market,

A) demand has increased relative to supply.
B) supply has increased relative to demand.
C) neither demand nor supply has changed significantly in the past two decades.
D) the concepts of demand and supply are irrelevant.

Question 38

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

A) one-tenth
B) one-fourth
C) four-fifths
D) one-half

Question 39

Rapidly rising U.S. health care costs have

A) forced the growth of wages to keep pace.
B) encouraged outsourcing.
C) caused some employers to use more part-time and temporary workers.
D) done all of these.

Question 40

The number of Americans without health insurance (as of 2015) is approximately

A) 20 million, or about 6.3 percent of the population.
B) 49 million, or about 15.3 percent of the population.
C) 30 million, or about 9.4 percent of the population.
D) 72 million, or about 22.5 percent of the population.

Question 41

The problem of asymmetric information is that

A) neither health care buyers nor providers are well-informed.
B) health care providers are well-informed, but buyers are not.
C) the outcomes of many complex medical procedures cannot be predicted.
D) insurance companies are well-informed, but policy purchasers are not.

Question 42

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

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

Question 43

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

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.

Question 44

If the existence of health insurance increases one's incentive to use the health care system more intensively, this is an illustration of

A) the adverse selection problem.
B) the moral hazard problem.
C) the benefits-received principle.
D) the Coase theorem.

Question 45

Which of the following is a supply factor in the health care market?

A) defensive medicine
B) the aging of the population
C) slow productivity growth in the health care industry
D) asymmetric information

Question 46

Economists argue that in treating patients,

A) physicians should use any test or procedures that might help the patient.
B) health care should not be rationed by physicians, because it is an entitlement or right.
C) both benefits and costs should be taken into account by physicians.
D) physicians should use any test or procedure whose marginal benefit is positive.

Question 47

Insurance tends to drive up health care costs by encouraging greater use of health care resources. Why has this occurred in the United States but not in Canada or the United Kingdom?

A) There is no health care insurance in Canada or the United Kingdom.
B) Canada and the United Kingdom use nonprice rationing to contain costs.
C) Canada and the United Kingdom have better health care technology that allows them to achieve lower costs than the United States.
D) Only private insurance creates an incentive to overuse health care resources.

Question 48

Health care costs have tended to rise more rapidly in the United States than in Canada because

A) state insurance regulators in the United States do not face the budget constraints that national regulators in Canada face.
B) people in the United States want more health care than people in Canada.
C) private insurance in the United States encourages overconsumption of health care; public insurance in Canada does not.
D) Canada has better achieved economies of scale in the production of health care.

Question 49

Defensive medicine refers to the idea that

A) it is more cost-efficient to prevent illnesses than to cure them.
B) physicians may require unnecessary testing as a means of protecting themselves against malpractice suits.
C) doctors know much more about diagnosing and treating illnesses than do health care consumers.
D) physicians do not advertise their services or fees.

Question 50

If an individual is less careful about avoiding accidents or illness because she has health insurance, this is an example of

A) the free-rider problem.
B) the moral hazard problem.
C) the adverse selection problem.
D) the Coase theorem.

Question 51

Which of the following is a demand-increasing factor in the health care market?

A) rising incomes
B) the aging of the population
C) asymmetric information
D) all of these

Question 52

Health care costs have greatly increased in recent years in the United States. This fact alone does not establish an overallocation of resources to health care, because

A) the benefits of health care have also greatly increased in recent years.
B) rising medical care prices have inflated health care costs.
C) the marginal cost of health care exceeds the average total cost of health care.
D) negative externalities sometimes result from additional health care spending.

Question 53

A major implication of asymmetric information is that

A) health care suppliers may reduce the supply of health care.
B) health care suppliers may increase the demand for health care.
C) collusion between health care suppliers and purchasers may accelerate the rise in costs.
D) resources may be underallocated to the health care industry.

Question 54

Other things equal, and given that the elasticity of demand for health care is 0.2, a 10 percent increase in the price of health care in the United States will reduce the quantity of health care demanded by about

A) 1 percent.
B) 2 percent.
C) 5 percent.
D) 20 percent.

Question 55

Defensive medicine

A) solves the moral hazard problem.
B) increases the demand and costs for health care.
C) solves the principal-agent problem.
D) is the same as preventive medicine.

Question 56

Other things equal, increased emphasis on providing the best possible medical care for all, regardless of income, will

A) increase the demand for health care.
B) increase the supply of health care.
C) have no effect.
D) decrease the demand for health care.

Question 57

According to most experts, which of the following factors is most important in causing health care costs to rise?

A) the aging of the population
B) rising incomes
C) malpractice suits
D) fee-for-service health insurance and cost-increasing technology

Question 58

In industrially advanced countries, the price elasticity of demand for health care is about

A) 2.0.
B) 0.2.
C) 4.5.
D) 1.0.

Question 59

If labor productivity in the health care industry rises very slowly relative to wages and salaries in the industry, this would tend to

A) increase the demand for health care.
B) decrease the demand for health care.
C) increase the supply of health care.
D) increase the cost of health care.

Question 60

The availability of health insurance tends to

A) decrease the quantity of health care demanded and cause an underallocation of resources to the health care industry.
B) increase the quantity of health care demanded and cause an underallocation of resources to the health care industry.
C) increase the quantity of health care demanded and cause an overallocation of resources to the health care industry.
D) decrease the quantity of health care demanded and cause an overallocation of resources to the health care industry.

Question 61

The two main types of managed-care organizations are

A) U.S. veterans' hospitals and university health clinics.
B) health maintenance organizations (HMOs) and private nursing homes.
C) health maintenance organizations (HMOs) and preferred provider organizations (PPOs).
D) preferred provider organizations (PPOs) and nonprofit hospitals.

Question 62

What was the primary goal of the proponents of the Patient Protection and Affordable Care Act?

A) improve the quality of care by reducing medical malpractice
B) reduce health care costs in the United States by 50 percent
C) make all U.S. health care publically (government) provided
D) extend health insurance coverage to all Americans

Question 63

The main purpose of HMOs and PPOs is to

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.

Question 64

Which of the following is a law passed in the last 20 years relating to health care?

A) establishment of health maintenance organizations to reduce health care costs
B) establishment of deductibles and copayments in health insurance policies
C) establishment of health savings accounts (HSAs) to promote saving for routine medical expenses
D) establishment of fixed Medicare payment to hospitals based on one of several hundred diagnostic categories

Question 65

Preferred provider organizations (PPOs)

A) charge a fixed amount per member, hire many of their own physicians, and provide health services only to members.
B) require that their members give up the right to file medical malpractice suits.
C) are illegal in several states.
D) require physicians and hospitals to provide discounted prices for their services as a condition for being included in the insurance plan.

Question 66

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

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.

Question 67

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

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.

Question 68

The employer mandate of the PPACA requires that

A) every firm must purchase health insurance for their full-time employees or pay a $2,000 fine per employee.
B) every firm with 50 or more full-time employees must purchase health insurance for their full-time employees or pay a $2,000 fine per employee.
C) every firm with fewer than 50 full-time employees must purchase health insurance for their full-time employees or pay a $2,000 fine per employee.
D) every firm with 500 or more employees must establish their own on-site medical facilities to provide employees with basic medical care.

Question 69

Which of the following is not one of the ways the PPACA attempts to cover the poor?

A) requiring larger employers to provide insurance for all of their full-time employees
B) providing health care directly to the poor through government-run clinics and hospitals
C) subsidizing the purchase of health insurance for those who buy to comply with the personal mandate
D) expanding Medicaid to cover anyone with an income less than 133 percent of the poverty level

Question 70

Federal tax policy

A) treats employer health insurance premiums as taxable income.
B) subsidizes health insurance and thereby increases the demand for health care.
C) subsidizes health insurance and thereby decreases the demand for health care.
D) corrects the overallocation of resources to the health care industry that would otherwise exist.

Question 71

Which of the following factors has contributed to rising health care prices in the United States?

A) The supply of physicians per 100,000 people has decreased since 1975.
B) Productivity growth in the health care industry has been negative in recent years.
C) Improvements in medical technology have significantly increased the number of patients that can be treated each year.
D) The supply of physicians per 100,000 people has risen since 1975, but not as fast as the increase in the demand for physicians' services.

Question 72

Insurance companies use deductibles and copayments to

A) increase access to health care.
B) reduce health care costs by discouraging overuse of the health care system.
C) prevent small companies from self-insuring their workers.
D) keep government out of the health care insurance industry.

Question 73

One of the main differences between PPOs and HMOs is that

A) HMO physicians charge on a traditional fee-for-service basis, while PPO physicians do not.
B) HMOs are usually for-profit organizations, whereas PPOs are not.
C) PPOs employ their own doctors, whereas HMOs do not.
D) PPO physicians charge on a traditional fee-for-service basis, while HMOs do not.

Question 74

All of the following are designed to reduce health care expenses for consumers except

A) HMOs.
B) PPOs.
C) the DRG payment system.
D) the fee-for-service system.

Question 75

Health savings accounts (HSAs), implemented by the 2003 Medicare law,

A) are only available to those enrolled in Medicare.
B) allow workers to accumulate untaxed dollars for payment of qualified medical expenses.
C) are criticized because they require workers to "use it or lose it" each year; workers are not allowed to accumulate balances over time.
D) can only be used to pay for prescription drugs.

Question 76

Suppose you go to a doctor but your health insurance plan does not reimburse you because you have not yet paid enough out of pocket for the year to qualify for insurance benefits. This is an example of

A) coinsurance.
B) a deductible.
C) monopsony power.
D) a deferred benefit plan.

Question 77

Suppose you go to a doctor, but your health insurance plan reimburses you for only 80 percent of the bill. This is an example of

A) a copayment.
B) a deductible.
C) monopsony power.
D) a deferred benefit plan.

Question 78

One of the provisions of the PPACA is a personal mandate that all individuals

A) pay a $1,000 deductible and 20 percent co-pay on all medical care except annual check-ups or preventative care.
B) contribute at least 30 percent of the total cost of employer-provided health insurance.
C) purchase health insurance for themselves and their dependents unless they are already covered by government or employer-provided insurance.
D) with preexisting conditions must purchase a specially designated government insurance plan.

Question 79

Health maintenance organizations (HMOs)

A) are based on the traditional fee-for-service system of paying physicians.
B) charge a fixed amount per member, hire many of their own physicians, and provide health services only to members.
C) are also known as preferred provider organizations.
D) are illegal in several states.

Question 80

Subsidies for those required to purchase health insurance under the personal mandate provision of the PPACA are

A) limited to those whose income is less than 133 percent of the federal poverty line.
B) limited to those whose income is at or below the federal poverty line.
C) provided to some individuals in the upper half of the income distribution.
D) a fixed amount per person for those eligible to receive the subsidies.