Deck 22: Health Care

Question 1

One way to limit the problem of adverse selection in health insurance is to _____.

A)investigate fraudulent activity
B)promote competition in health insurance markets
C)charge premiums in proportion to the probability of making claims
D)a and c

Answer 1

C

Question 2

Since so many people lived in river towns during the nineteenth century,public health board were primarily concerned with _____.

A)preventing drowning
B)keeping the water supply uncontaminated
C)food quality on steamboats
D)inspecting food brought into local ports

Answer 2

B

Question 3

The increase in extremely expensive lifesaving treatments is a primary cause of the rise in health insurance because _____.

A)people want to protect against low probability,expensive events
B)people view insurance as a down payment on a predicable event
C)people want to protect against low probability,inexpensive events
D)individuals want to protect themselves from being gouged by doctors who know they need a lifesaving operation

Answer 3

A

Question 4

The general trend in health care policy during the twentieth century has been _____.

A)towards preventing the spread of communicable diseases
B)towards ensuring that pharmaceuticals and physicians are well-regulated
C)focused on general health care expenditures
D)focused on general public health issues

Question 5

Until 1987,the primary role of the federal government with regard to public health was _____.

A)to regulate the interstate movements of physicians
B)to regulate medicines to ensure a minimal level of quality
C)to control epidemics through the control and quarantine of ports of entry
D)to pay for the health care of the indigent

Question 6

A major factor in the creation and proliferation of comprehensive health care insurance is _____.

A)the health care tax credit
B)the tax deductibility of employer-paid health plans
C)the tremendous increase in the hard core poor
D)the increase in low-cost lifesaving techniques

Question 7

Government clean up toxic waste sites is _____.

A)justified on public good grounds
B)justified on externality grounds
C)justified on equity grounds
D)justified on technical monopoly grounds

Question 8

The source of the adverse selection problem is ______.

A)that individuals with high incomes are able to pay all medical costs out-of-pocket
B)that individuals least likely to need health care do not purchase insurance
C)individuals lack important information regarding the appropriate health care for them
D)individuals desire to have comprehensive health care insurance

Question 9

Which of the following have contributed to health insurance becoming commonplace during the latter half of the twentieth century?

A)The tremendous rise in medical costs.
B)The increase in fraternal order societies which provided health insurance.
C)The growth of employer-provided health care.
D)all of the above
E)a and c

Question 10

The problem of moral hazard arises because _____.

A)individuals receive insurance through their employer,who has different incentives
B)individuals with insurance have no incentive to avoid insured expenditures
C)some individuals have religious objections to purchasing insurance
D)some individuals are immoral

Question 11

Which of the following is not a rationale for government involvement in health care markets?

A)Government involvement is necessary to prevent the spread of contagious diseases,which are type of externality.
B)Government involvement is necessary to provide individuals with information on the quality of health care by regulating drugs and physicians.
C)Government involvement is necessary to ensure that physicians do not form illegal cartels to restrict entry into medicine in order to increase profits.
D)Government involvement is necessary to ensure that everyone has health insurance and thus can gain access to health care.

Question 12

One rationale for government involvement in health care markets is that government involvement is necessary to prevent the spread of contagious diseases,which can be a type of externality.Which of the following is not an example of a public health externality?

A)The provision of vaccinations against communicable diseases.
B)The provision of clean drinking water to prevent the spread of water-borne diseases.
C)The elimination of pools of standing water to help prevent the spread of malaria.
D)The provision of drugs to help control cholesterol,a primary factor in heart disease.

Question 13

The problem of moral hazard in health insurance _____.

A)drives up health care costs
B)exacerbates the adverse selection problem
C)can cause individuals to be more careful
D)creates incentives to diet and regular exercise

Question 14

The distinction between public health problems and private health problems becomes blurred when _____.

A)externalities are positive
B)preferences are quasi-linear
C)health insurance is unavailable
D)health care spending is from public coffers

Question 15

If insurers charge everyone the same premium based on the average cost of insuring the entire group,_____.

A)the poor will drop out because the premiums are too high
B)the middle class individuals will drop out because they can self-insure
C)the healthiest individuals in the market will drop out
D)the sickest individuals in the market will drop out

Question 16

By 1900,_____ states had a state board of health.

A)17
B)32
C)37
D)all

Question 17

One problem with traditional health insurance plans is _____.

A)people have little choice over physicians
B)it has eliminated employer-provided health care
C)doctors have little incentive to economize
D)patients spent too much time scrutinizing their bills

Question 18

Health insurance was not an important policy issues prior to 1940 because _____.

A)less than 10 percent of the U.S.population had health insurance
B)health care was so cheap
C)of the widespread ability of local charitable hospitals
D)most individuals were covered by veteran health benefits

Question 19

The original rationale for government involvement in health care was _____.

A)in helping to prevent and control contagious disease
B)the dissemination of health care information
C)the provision of health care insurance for the needy
D)the provision of health care for the elderly

Question 20

In the 1800s,public health boards were primarily concerned with _____.

A)sanitary conditions in frontier areas
B)sanitary conditions in large cities
C)establishing public hospitals
D)regulating private hospitals

Question 21

Under a "cost-plus" system of hospital reimbursement,hospitals have the incentive to _____.

A)minimize expenditures
B)purchase the most recent high-tech equipment
C)release patients early
D)shift away from more expensive surgeries

Question 22

A Health Maintenance Organization is _____.

A)a multi-doctor office
B)a type of pre-paid health care
C)a series of specialty hospitals
D)increasingly rare

Question 23

Early in the 20^th century the American Medical Association strongly encouraged _____.

A)HMOs
B)Medicare
C)Medicaid
D)fee-for-service medical care

Question 24

Medicare provides health care to _____.

A)the elderly
B)the needy
C)the widowed
D)the orphaned

Question 25

Skin cancer creates a public health externality.

Question 26

One way the incentive problems inherent in comprehensive health insurance can be mitigated is through _____.

A)deductibles
B)premiums
C)reimbursements
D)screenings

Question 27

Part B of the Medicare program covers _____ and is _____.

A)pharmaceuticals;voluntary
B)pharmaceuticals;mandatory
C)physician costs;voluntary
D)physician costs;mandatory

Question 28

Medical savings accounts _____.

A)provide insurance for very small health care expenditures
B)provide little accountability for small purchases
C)provide catastrophic coverage
D)all of the above
E)a and b

Question 29

While Medicaid is targeted towards low-income individuals,exact qualifications are determined by _____.

A)the Department of Health and Human Services
B)state governments
C)local governments
D)judicial rulings

Question 30

Under comprehensive health insurance the level of output is determined where _____.

A)supply equals demand
B)demand equals zero
C)supply is of unitary elasticity
D)the insurer sets it

Question 31

The creation of Medicare and Medicaid in 1965 dealt with contemporary public health concerns.

Question 32

The practice of medicine in the United States came under widespread regulation _____.

A)before the Civil War
B)between the Civil War and World War I
C)between World War I and World War II
D)after World War II

Question 33

The Canadian health care system _____.

A)is an example of a single-payer system
B)provides universal coverage
C)rations the use of specialists
D)all of the above

Question 34

HMOs create the incentive to _____.

A)minimize health care expenditures
B)avoid important but expensive procedures
C)enroll individuals with serious illnesses
D)a and b

Question 35

The Medicaid program is financed by _____.

A)excise taxes
B)state governments
C)the federal government
D)state governments and the federal government

Question 36

Employer provided health care limits the moral hazard problem to a large degree.

Question 37

One problem with employer mandated health insurance is _____.

A)it increases the cost of hiring employees
B)it makes it difficult to employ highly-skilled individuals
C)it provides universal coverage
D)it creates moral hazard

Question 38

The tax deductibility of employer-provided health insurance is a primary factor in the spread of health insurance during the latter half of the twentieth century.

Question 39

Until the last half of the twentieth century,most people did not have health insurance.

Question 40

Until the creation of the Marine Hospital Service in 1918,the primary role of the federal government in health care was to quarantine ships and control ports to prevent epidemics.

Question 41

Provide three rationales for government involvement in health care markets.Which is the most recent?

Question 42

"Pay or play" reduces the health care cost of hiring low-wage employees relative to an employer mandate.

Question 43

Why do individuals demand health insurance? Does the health insurance provided through most employers more or less than people would get if purchased on their own? Why

Question 44

One way the Canadian system lowers costs is by rationing expensive procedures.

Question 45

The costs associated with the overproduction of medical services as a result of comprehensive health insurance are passed on to everyone who has health insurance in the form of higher premiums.

Question 46

Describe the operation of the Medicare program.Discuss who is covered under the program,how it is financed and the distinction between Part A and Part B of the program.

Question 47

Medicaid coverage is universal for all low-income individuals regardless of health.

Question 48

The American Medical Association is responsible for many of the characteristics of the modern health care delivery system.

Question 49

Part A of Medicare finances hospital care.

Question 50

Define moral hazard and adverse selection in the context of health insurance markets.Make sure to discuss why they are problems for health insurance markets.

Question 51

The structure of incentives built into standard comprehensive health insurance gives no one an incentive to control health care costs.If the patient and the doctor lack any incentive to consider costs,will the output of medical services be higher or lower than if they did consider costs? Illustrate your answer with a diagram.Clearly label the welfare cost resulting from the over-consumption of medical services.

Question 52

The marginal cost of additional health care when there are copayments is zero.