Question 1

Briefly describe the types of health care systems in Canada, Japan, and the United Kingdom.

Accepted Answer

Canada has a single-payer health care sy

Question 2

In what ways do economists and policymakers who believe that the federal government should have a larger role in the health care system criticize the Patient Protection and Affordable Care Act (ACA)?

Accepted Answer

These people believe that information pr

Question 3

In the United States, the bulk of health care spending is paid by health insurance companies. Such a system is also called a third-party payer system where consumers of health care pay a nominal fee and the rest are paid by the health insurance provider. Why might such a system lead to an inefficient outcome?

Accepted Answer

A)  Health insurance companies have an incentive to control cost and therefore tend to deny consumers many cutting edge medical treatments. 
B)  Consumers have an incentive to over-consume health care services because they pay prices well below the cost of providing these services. 
C)  Physicians concerned that insurance companies may not approve payments tend not to order expensive tests for their patients. 
D)  Consumers fearing that excessive use of health care services may lead to a rise in insurance premiums tend to under-consume health care services. 
A)  Health insurance companies have an incentive to control cost and therefore tend to deny consumers many cutting edge medical treatments. 
B)  Consumers have an incentive to over-consume health care services because they pay prices well below the cost of providing these services. 
C)  Physicians concerned that insurance companies may not approve payments tend not to order expensive tests for their patients. 
D)  Consumers fearing that excessive use of health care services may lead to a rise in insurance premiums tend to under-consume health care services.

Question 4

The rising cost of malpractice insurance is one of the leading causes of the increase in health care spending as a percentage of GDP in the United States.

Accepted Answer

A) True 
 B)False

Question 5

The number of people receiving Medicare is expected to grow to 74 million by the year

Accepted Answer

A)  2105. 
B)  2020. 
C)  2025. 
D)  2075. 
A)  2105. 
B)  2020. 
C)  2025. 
D)  2075.

Question 6

Figure 7-2   Figure 7-2 represents the market for vaccinations. Vaccinations are considered a benefit to society, and the figure shows both the marginal private benefit and the marginal social benefit from vaccinations.
-Refer to Figure 7-2. The efficient equilibrium quantity is ________ thousand vaccinations.

Accepted Answer

A)  200 
B)  400 
C)  600 
D)  > 600 
A)  200 
B)  400 
C)  600 
D)  > 600

Question 7

In the United States in 2016, over 90 percent of people without health insurance were below the age of 35.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following Nobel laureates became known for the study of asymmetric information?

Accepted Answer

A)  Gary Becker 
B)  Michael Spence 
C)  George Akerlof 
D)  Ronald Coase 
A)  Gary Becker 
B)  Michael Spence 
C)  George Akerlof 
D)  Ronald Coase

Question 9

Suppose a large firm allows its employees to choose whether to participate in its health insurance plan. The firm is trying to decide between two plans: Plan I has a low monthly premium but a high deductible, and Plan II has a high monthly premium but a low deductible. Under which plan is adverse selection likely to be a bigger problem?

Accepted Answer

A)  Plan I because it is likely to draw participants who expect high medical costs. This group expects to consume much health care services and therefore prefer low deductibles. 
B)  Plan II because it is likely to draw participants who expect high medical costs. Healthy individuals who do not expect to consume much health care services will not be willing to pay the high premiums. 
C)  Plan I because it is likely to draw the relatively healthy employees who do not expect to spend much on health care. Because the monthly premiums are low, the insurance company has to bear a bigger financial burden in the event of serious illnesses. 
D)  Plan II because it is likely to draw employees who tend to over-consume health care services because of the low deductible. Insurance companies are likely to end up paying out more claims than the premiums they collect. 
A)  Plan I because it is likely to draw participants who expect high medical costs. This group expects to consume much health care services and therefore prefer low deductibles. 
B)  Plan II because it is likely to draw participants who expect high medical costs. Healthy individuals who do not expect to consume much health care services will not be willing to pay the high premiums. 
C)  Plan I because it is likely to draw the relatively healthy employees who do not expect to spend much on health care. Because the monthly premiums are low, the insurance company has to bear a bigger financial burden in the event of serious illnesses. 
D)  Plan II because it is likely to draw employees who tend to over-consume health care services because of the low deductible. Insurance companies are likely to end up paying out more claims than the premiums they collect.

Question 10

On average, people in the United States spend a smaller percentage of their income on health care than do people in most other countries.

Accepted Answer

A) True 
 B)False

Question 11

Under the Patient Protection and Affordable Care Act (ACA), individuals who do not have health insurance are subject to a fine.

Accepted Answer

A) True 
 B)False

Question 12

Health insurance plans which typically reimburse doctors mainly by paying ________ are known as health maintenance organizations.

Accepted Answer

A)  a fee for each individual service provided 
B)  a fee for each individual office visit 
C)  an escalating fee based on the number of patients being treated 
D)  a flat fee per patient 
A)  a fee for each individual service provided 
B)  a fee for each individual office visit 
C)  an escalating fee based on the number of patients being treated 
D)  a flat fee per patient

Question 13

Health care spending per person is lower in the United States than in most other high-income countries.

Accepted Answer

A) True 
 B)False

Question 14

By 2017, spending on federal health care programs such as Medicare and Medicaid had grown to 7 percent of GDP.

Accepted Answer

A) True 
 B)False

Question 15

Figure 7-5   Figure 7-5 represents the market for medical services with and without insurance, and the effect of a third-party payer system on the demand for medical services.
-Refer to Figure 7-5. With insurance and a third-party payer system, what is the amount of the deadweight loss?

Accepted Answer

A)  $0 
B)  $2,500 
C)  $5,000 
D)  $24,000 
A)  $0 
B)  $2,500 
C)  $5,000 
D)  $24,000

Question 16

College education tends to result in a positive externality because the recipient receives the full benefit of the education.

Accepted Answer

A) True 
 B)False

Question 17

In the United States since 1900, life expectancy at birth has ________ and the death rate has ________.

Accepted Answer

A)  increased; increased 
B)  increased; decreased 
C)  decreased; increased 
D)  decreased; decreased 
A)  increased; increased 
B)  increased; decreased 
C)  decreased; increased 
D)  decreased; decreased

Question 18

Under current tax laws, individuals do not pay taxes on health insurance benefits they receive from their employers. As a result

Accepted Answer

A)  the federal government spends more than it receives in tax revenue. 
B)  individuals are encouraged to want generous health coverage that reduces their incentives to cut costs. 
C)  the quality of health care provided is less than it would be if benefits were taxed. 
D)  politicians are encouraged to raise income and payroll taxes. 
A)  the federal government spends more than it receives in tax revenue. 
B)  individuals are encouraged to want generous health coverage that reduces their incentives to cut costs. 
C)  the quality of health care provided is less than it would be if benefits were taxed. 
D)  politicians are encouraged to raise income and payroll taxes.

Question 19

Suppose that in a market for used cars, there are good used cars and bad used cars (lemons). Consumers are willing to pay as much as $6,000 for a good used car but only $1,000 for a lemon. Sellers of good used cars value their cars at $5,000 each and sellers of lemons value their cars at $800 each. Buyers cannot tell if a used car is reliable or is a lemon. Based on this information, what is the likely outcome in the market for used cars?

Accepted Answer

A)  Both good used cars and lemons will sell for $4,500 each. 
B)  Only lemons will sell, for $800 each. 
C)  Both good used cars and lemons will sell for $1,000 each. 
D)  Most used cars offered for sale will be lemons. 
A)  Both good used cars and lemons will sell for $4,500 each. 
B)  Only lemons will sell, for $800 each. 
C)  Both good used cars and lemons will sell for $1,000 each. 
D)  Most used cars offered for sale will be lemons.

Question 20

Of the following, the most rapid rise in health care costs in the United States can be attributed to

Accepted Answer

A)  the cost of malpractice insurance. 
B)  the cost to treat uninsured patients. 
C)  slow growth in labor productivity in health care. 
D)  the cost of malpractice lawsuit settlements. 
A)  the cost of malpractice insurance. 
B)  the cost to treat uninsured patients. 
C)  slow growth in labor productivity in health care. 
D)  the cost of malpractice lawsuit settlements.

Exam 7: The Economics of Health Care

Briefly describe the types of health care systems in Canada, Japan, and the United Kingdom.

In what ways do economists and policymakers who believe that the federal government should have a larger role in the health care system criticize the Patient Protection and Affordable Care Act (ACA)?

The rising cost of malpractice insurance is one of the leading causes of the increase in health care spending as a percentage of GDP in the United States.

The number of people receiving Medicare is expected to grow to 74 million by the year

In the United States in 2016, over 90 percent of people without health insurance were below the age of 35.

Which of the following Nobel laureates became known for the study of asymmetric information?

On average, people in the United States spend a smaller percentage of their income on health care than do people in most other countries.

Under the Patient Protection and Affordable Care Act (ACA), individuals who do not have health insurance are subject to a fine.

Health insurance plans which typically reimburse doctors mainly by paying ________ are known as health maintenance organizations.

Health care spending per person is lower in the United States than in most other high-income countries.

By 2017, spending on federal health care programs such as Medicare and Medicaid had grown to 7 percent of GDP.

Figure 7-5 Figure 7-5 represents the market for medical services with and without insurance, and the effect of a third-party payer system on the demand for medical services. -Refer to Figure 7-5. With insurance and a third-party payer system, what is the amount of the deadweight loss?

College education tends to result in a positive externality because the recipient receives the full benefit of the education.

In the United States since 1900, life expectancy at birth has ________ and the death rate has ________.

Under current tax laws, individuals do not pay taxes on health insurance benefits they receive from their employers. As a result

Of the following, the most rapid rise in health care costs in the United States can be attributed to

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

In the United States since 1900, life expectancy at birth has and the death rate has .