Question 1

Why is the current U.S. tax-treatment of health insurance purchased through one's employer discriminatory?

Accepted Answer

The current U.S. tax system allows employer-sponsored health insurance to be purchased with pre-tax dollars, while individuals buying insurance directly do not receive the same tax benefit, leading to higher effective costs for them.

Question 2

Third-party payments by either the government or an insurance company accounted for ____ of the 2011 healthcare expenditures, compared to ____ paid by third parties in 1960. (Fill in the blanks)

Accepted Answer

In 2011, third-party payments accounted for 86 percent of healthcare expenditures, a significant increase from 45 percent in 1960, reflecting the growing role of insurance and government in healthcare financing.

Question 3

Federal tax legislation makes it cheaper for individuals and families to pay for health care

Accepted Answer

Federal tax legislation often provides tax advantages for employer-sponsored health insurance, making it cheaper for individuals and families to purchase insurance through their employer rather than directly. Both options A and B reflect this advantage.

Question 4

If a third party pays a larger and larger share of the purchasing price of a good, economic theory indicates that

Accepted Answer

When a third party covers a larger portion of the cost, consumers are less sensitive to price, leading suppliers to have less incentive to keep prices low, as demand becomes less elastic.

Question 5

During the last three decades, the real (adjusted for inflation) expenditures

Accepted Answer

Both Medicare and Medicaid have seen substantial increases in real expenditures over the last three decades due to rising healthcare costs and an aging population.

Question 6

When health insurance is purchased primarily through one's employer,

Accepted Answer

When health insurance is tied to employment, employees may face higher costs or lose coverage if they switch jobs, making it more difficult to move to areas with available jobs.

Question 7

Which of the following is fully tax deductible (it is either subtracted or excluded from taxable income) under the current tax system of the United States?

Accepted Answer

Healthcare insurance purchased through one's employer is often paid with pre-tax dollars, making it fully tax deductible.

Question 8

During the last four decades, the share of health-care expenditures paid for by third parties (either the government or insurance companies)

Accepted Answer

The share of health-care expenditures paid by third parties has increased significantly from around 45% in 1960 to over 85% in recent years, due to the expansion of government programs like Medicare and Medicaid and the growth of private health insurance.

Question 9

Given the current structure of health-care finance, which of the following is most likely to occur when the baby boom generation begins to retire and the elderly population increases rapidly during the years following 2010?

Accepted Answer

As the baby boom generation retires, the demand for health-care services is expected to increase, leading to continued or accelerated health-care inflation and spending growth.

Question 10

Does it make any difference whether health-care expenditures are paid for by the consumer or by a third party (the government or an insurance company, for example)?

Accepted Answer

When consumers pay for health care with their own money, they have a stronger incentive to economize and make cost-effective choices, as they directly bear the cost.

Question 11

As the share of healthcare expenditures paid for by third parties has grown, both healthcare prices and total expenditures have increased rapidly. Is this surprising?

Accepted Answer

Third-party payments reduce the direct cost to consumers, weakening their incentive to economize, leading to increased demand and higher healthcare expenditures.

Question 12

A 2.9 percent payroll tax (1.45 percent levied on both the employee and the employer) imposed on current workers is used to finance the

Accepted Answer

The 2.9 percent payroll tax is specifically used to fund Medicare Part A, which covers hospitalization costs for Medicare beneficiaries.

Question 13

Which of the following is the best example of a health care service with a large public good component?

Accepted Answer

Vaccines that reduce the incidence of communicable diseases have a large public good component because they provide benefits not only to the individual receiving the vaccine but also to the broader community by reducing the spread of disease.

Question 14

As third-party payments and government expenditures on healthcare increased following the passage of Medicare and Medicaid,

Accepted Answer

The introduction of Medicare and Medicaid increased demand for healthcare services, leading to higher prices and total expenditures as consumers had less incentive to economize and suppliers had less incentive to keep costs low.

Question 15

The growth of third-party payments (payments by insurers and the government) of healthcare services during the last four decades has been accompanied by

Accepted Answer

The growth of third-party payments has led to less price sensitivity among consumers, contributing to persistent increases in healthcare prices and total expenditures.

Question 16

Which of the following is true about health care?

Accepted Answer

Public policy, such as tax incentives, encourages Americans to purchase health insurance through employers, often with low deductibles and co-payments.

Question 17

Which of the following grew rapidly during the years following the passage of the Medicare and Medicaid programs?

Accepted Answer

The introduction of Medicare and Medicaid led to increased third-party financing, higher healthcare prices, and a larger share of the economy devoted to healthcare expenditures.

Question 18

What percentage of U.S. healthcare expenditures is currently paid for by a third party, either the government or an insurance company?

Accepted Answer

More than 85 percent of U.S. healthcare expenditures are paid for by third parties, including government programs like Medicare and Medicaid, as well as private insurance companies.

Question 19

Which of the following is true about health care?

Accepted Answer

In Canada and most European countries, healthcare is publicly funded and provided, which is often referred to as socialized medicine. However, scarcity and resource limitations still exist, and not all healthcare is free or unlimited.

Question 20

Real expenditures on Medicare and Medicaid

Accepted Answer

Real expenditures on Medicare and Medicaid have approximately doubled during each of the last three decades due to rising healthcare costs, an aging population, and expanded coverage.

Quiz 7: Consumer Choice and Elasticity

Why is the current U.S. tax-treatment of health insurance purchased through one's employer discriminatory?

Third-party payments by either the government or an insurance company accounted for of the 2011 healthcare expenditures, compared to paid by third parties in 1960. (Fill in the blanks)

Federal tax legislation makes it cheaper for individuals and families to pay for health care

If a third party pays a larger and larger share of the purchasing price of a good, economic theory indicates that

During the last three decades, the real (adjusted for inflation) expenditures

When health insurance is purchased primarily through one's employer,

Which of the following is fully tax deductible (it is either subtracted or excluded from taxable income) under the current tax system of the United States?

During the last four decades, the share of health-care expenditures paid for by third parties (either the government or insurance companies)

Given the current structure of health-care finance, which of the following is most likely to occur when the baby boom generation begins to retire and the elderly population increases rapidly during the years following 2010?

Does it make any difference whether health-care expenditures are paid for by the consumer or by a third party (the government or an insurance company, for example) ?

As the share of healthcare expenditures paid for by third parties has grown, both healthcare prices and total expenditures have increased rapidly. Is this surprising?

A 2.9 percent payroll tax (1.45 percent levied on both the employee and the employer) imposed on current workers is used to finance the

Which of the following is the best example of a health care service with a large public good component?

As third-party payments and government expenditures on healthcare increased following the passage of Medicare and Medicaid,

The growth of third-party payments (payments by insurers and the government) of healthcare services during the last four decades has been accompanied by

Which of the following is true about health care?

Which of the following grew rapidly during the years following the passage of the Medicare and Medicaid programs?

What percentage of U.S. healthcare expenditures is currently paid for by a third party, either the government or an insurance company?

Which of the following is true about health care?

Real expenditures on Medicare and Medicaid