Exam 1: Choices: Money, Medicine, and Health

Third party payers account for 60% of all health care expenditures in 2012.

A US citizen is considering having plastic surgery in Costa Rica. The next best alternative for her is to have that surgery done in a local doctor's office, where it is priced significantly higher. The full opportunity cost of having surgery in Costa Rica versus having it done locally would include all of the following except

Ranking everyone by the amount spent on medical care, 70 percent of the total (all expenditures for all people) is accounted for by the top 10 percent of patients. This phenomenon is called cost shifting.

Who pays for research in the U.S. health care industry?

When a drug company advertises it will provide a prescription drug at no charge to certain individuals who cannot afford a doctor prescribed drug, costs are most likely being shifted away from individuals who are paying high prices to those who are paying nothing.

A hospital system is rewarded with higher profits in the short term when it implements electronic health records which increase the timeliness of physician and patient communication.

Not only is the share of the GDP going to health care higher in 2012 than in 1929, the wages of health care workers have risen more rapidly than for other types of labor.

In which of the following examples does the fundamental theorem of exchange not apply?

Explain why the existence of third party payers make people less sensitive to price when buying health care services in the hospital than they would have been in 1929.

Jenna pays $400 for a pair of designer eyeglasses. She realizes a week later that she really does not believe they are worth $400 and the eye doctor robbed her and she overpaid. Use the Fundamental Theorem of Exchange to refute her claim.