Deck 11: The Physician Services Market

Question 1

How did physicians accepting Medicare assignments cause price discrimination?

Answer 1

The introduction of different insurance reimbursement rates allowed physicians to practice third-degree price discrimination.For example,a physician accepting Medicare assignment was paid 80% of their approved fee by Medicare,and the patient was responsible for the remaining 20% co-payment,which had to be paid directly to the physician (in addition to a small annual deductible).A physician not accepting Medicare assignments billed the patient for the entire fee,which was greater than the Medicare-approved fee.The patient then paid the entire fee directly to the physician and was reimbursed by Medicare for only 80% of the approved fee.Thus,the patient was responsible not only for the 20% co-payment of the approved fee,but also for the difference between the approved fee and the physician's charge.This difference was referred to as "balance billing."

Question 2

Physicians' pay in the United States is high due to

A)High training costs
B)High return on training
C)Both a and b
D)Neither a nor b

Answer 2

C
Training and returns from education explain virtually all of the high income for physicians.

Question 3

The observation that an increase in the supply of physicians to an area is matched by an increase in the price of physicians' services (rather than a price decrease)can be explained via the supplier-induced demand hypothesis.Which of the following is also a plausible explanation for this observation?

A)An increase in the supply of physicians reduces time and travel costs to consumers,causing demand to increase
B)An increase in the supply of physicians increases consumers' perceptions of the quality of health care available,causing demand to increase
C)An increase in the supply of physicians may correspond to a contemporaneous increase in demand for reasons such as an aging population or rising consumer incomes
D)All of the above

Answer 3

C
An increase in the supply of physicians reduces time and travel costs to consumers,causing demand to increase is a change in price not demand.In the response "An increase in the supply of physicians increases consumers' perceptions of the quality of health care available,causing demand to increase",not all increases in supply are associated with changes in quality.

Question 4

A specific opportunity cost of attending medical school is:

A)The tuition fee
B)The foregone income
C)The sleep deprivation and fatigue during arduous internships
D)All of the above

Question 5

Physician-induced demand

A)Increases medical prices
B)Increases use of medical services
C)Both a and b
D)Neither a nor b

Question 6

Which of the following would increase the supply of physicians?

A)Increasing the cost of attending medical school
B)More scholarships and grants to cover medical school tuition
C)Increasing the medical school entrance requirements to include 15 hours of economics
D)Making it easier for plaintiffs to prove medical malpractice claims
E)Paying medical schools to eliminate residency opportunities in some specialties

Question 7

Physicians who accept assignment on their Medicare patients

A)Bill patients for 80% of the allowable fee
B)Agree to forego balance billing
C)Accept the allowable fee for all services
D)Agree to charge private insurance patients the same fees as Medicare patients
E)Both b and c

Question 8

A physician acts as a perfect agent when

A)She does not injure a patient when providing a treatment
B)She requires patients to make medical choices for themselves
C)She makes the same medical care decisions for a patient as a fully informed patient
D)She makes the same medical care decisions for a patient as she would make for herself.
E)She provides free medical care to poor and uninsured patients

Question 9

Define defensive medicine and describe what Baicker,Fisher,and Chandra found as the cost of defensive medicine.

Question 10

A physician's office expenses increase 10 percent,so she decides to raise the price of office visits.Assuming the demand curve for office visits does not shift,what will happen to the total number of office visits and practice revenues?

A)Office visits and total revenue stay the same if demand is elastic
B)Office visits and total revenue rise if demand is inelastic
C)Office visits and total revenue fall if demand is inelastic
D)Office visits will fall and total revenue will rise if demand is inelastic
E)Office visits will rise and total revenue will fall if demand is elastic

Question 11

On average,the training costs (both money and time)for a physician are felt to explain

A)Virtually not at all the high income of physicians
B)Partially the high income of physicians
C)Completely the high income of physicians

Question 12

What are the reasons why both the size of medical groups and their numbers have Explain.

Question 13

Which of the following will not change the demand for office visits to the physician?

A)Unusually cold and damp weather during the winter
B)A change in the price of an office visit
C)Layoffs at the local plant causing a decrease in the number of people with health insurance in the community
D)Television advertising by drug manufacturers to promote a new over-the-counter influenza treatment
E)They all change the demand for office visits

Question 14

The frequency of malpractice claims against physicians

A)Is higher for general practitioners than any other specialty
B)Has increased dramatically since the mid-1980s for all specialties
C)Differs little among specialties
D)Is greater for those specialties that practice high-risk invasive procedures
E)Will continue to soar unless tort laws are reformed

Question 15

The rate of return on training for physicians in the United States,when compared to that for most other educational groups (college graduates,PhDs)

A)Lower
B)Similar
C)A bit higher
D)A lot higher

Question 16

Explain the effects of advertising on physician services.

Question 17

Which of the following statements about the distribution of physicians among specialties is true in the United States?

A)The majority of physicians specialize in general/family practice
B)There are twice as many generalists as there are specialists
C)There are twice as many specialists as there are generalists
D)The specialty distribution in the United States is similar to that of the rest of the world
E)None of the above

Question 18

Which of these would be likely to reduce the extent of supplier-induced demand?

A)Physicians being remunerated on a "capitation" basis rather than a "fee for service" basis
B)An increase in the number of physicians coming out of medical schools
C)A reduction in the medical and health knowledge of the general population
D)Less advertising and other competitive behaviors by physicians

Question 19

For GPs (general practitioners)to play an effective coordinator's role (rather than a gatekeeper's)in a health care organization,they must be made financially responsible for their patients' care.Thus,they should be paid by:

A)Salary
B)A block budget based on past care expenses
C)Fee-for-service
D)Capitation
E)Per diem (or per period of stay at hospital)

Question 20

What is supplier-induced demand and explain its affects on medical prices and services?