Exam 13: Macroeconomics and Medical Care

If real healthcare expenditures per capita have grown 6% last year, while real GDP per capita has grown 3% last year, we can safely predict that the health share of GDP last year

Explain why physician groups and health service workers' unions prefer stricter licensure requirements rather than cost control efforts from legislators.

Which of the following statements is true?

Karen Davis, health economist who served as deputy assistant secretary for health policy in the Department of Health and Human Services in the Carter administration, has been quoted (Health Affairs, 2009) as saying that industry response to Carter's "voluntary effort (VE)" legislation proposal "dissipated within three years of its initial roll-out in 1978 and had no lasting impact on rising hospital expenditures." Why would such a reminder be relevant more than 30 years later? What characteristic of health expenditure spending relative to the macroeconomy explains the failure of VE?

The effect of cost controls implemented under the institution of the DRG payment structure to hospitals has been blunted by the general trend for increased out-patient expenditures.

The Iron Law: Medical Costs = Medical Incomes is the same as the identity specified by health economist Uwe Reinhardt as the Alfred E. Neuman's Cosmic Law of Health Care, "Every dollar of health spending is someone else's health-care income, including fraud, waste and abuse."

The response of the health care industry to legislative and macroeconomic shocks is delayed due to the lengthy nature of training for many health care jobs, the contractual arrangements for many health care jobs, and the process of adjustments across the economy. Which of the historical examples below does not serve as an illustration of this phenomenon?

All other things equal, if an individual earning $100,000 per year has an income elasticity of demand for health care of 0.4, if her salary increases by 10%, her expenditures on health care will increase by $4,000.

The Iron Law means that, without exceptions, medical income may exceed medical spending by no more than 15%.

It took about 8 years for the Health Professions Educational Assistance Act of 1963 to show the fully intended increase in the physician supply.

If the number of people diagnosed with chronic diseases doubles next year, the amount of capital and labor resources required to treat those people will have to double next year too.

The major determinants of total health care spending are

When examining the relationship between the rates of growth of health expenditures and GDP in order to build a model for forecasting healthcare expenditures, the most precise estimate would come from using __________ as an independent variable.

When trying to forecast national healthcare expenditures many years into the future, economists rely on a combination of which two theories?

"Unexpected inflation acts to redistribute earning power and wealth." Explain how this statement might mean that during periods of high inflation, workers in health care industry may actually be hurt more than workers in other industries.

GDP in country X is $2,900 per capita, or about $3.3 trillion for all of country X. If the expected growth in the real GDP of country X is estimated to be about 7% for next year, health expenditures should increase by at least $203 per capita.

Most of the increase in the labor portion of total health care expenditures in the past 40 years can be explained by

If the inflation rate in the U.S. was 1.5% in 2010 and 3.0% in 2011, then we can estimate that the contribution of these inflationary trends towards the increase in healthcare expenditures in 2011 was

Discuss the correlation between GDP growth and health outcomes. Compare short-term trends vs. long-term trends. Why would this be an example of the fallacy of composition in health economics?

Which of the following is not among the methods of cost control used by the government during recent decades?