Question 1

In 2007,third-party payments accounted for approximately what percent of medical-care expenditures in the United States?

Accepted Answer

A) 25 percent 
B) 46 percent 
C) 65 percent 
D) 86 percent 
A) 25 percent 
B) 46 percent 
C) 65 percent 
D) 86 percent D

Question 2

Growth in the share of health-care expenditures covered by third parties (for example,insurance or government programs)will

Accepted Answer

A) place downward pressure on the prices of health-care services. 
B) reduce the incentive of suppliers to provide consumers with health-care services at a low cost. 
C) make consumers more sensitive to the price of health-care services. 
D) make it easier to control the growth of health-care expenditures. 
A) place downward pressure on the prices of health-care services. 
B) reduce the incentive of suppliers to provide consumers with health-care services at a low cost. 
C) make consumers more sensitive to the price of health-care services. 
D) make it easier to control the growth of health-care expenditures. B

Question 3

Special savings accounts that individuals could pay into directly and then use to pay medical bills or purchase a catastrophic health insurance plan are known as

Accepted Answer

A) flexible benefit accounts. 
B) health savings accounts. 
C) health-care savings bonds. 
D) HMOs. 
A) flexible benefit accounts. 
B) health savings accounts. 
C) health-care savings bonds. 
D) HMOs. B

Question 4

By promoting third-party payment of health-care expenses and the purchase of health insurance through employers,health-care policy has

Accepted Answer

A) eroded the incentive of health-care consumers and providers to economize. 
B) undermined the smooth operation of health-care markets. 
C) made it more costly for persons without a job to obtain health insurance. 
D) done all of the above. 
A) eroded the incentive of health-care consumers and providers to economize. 
B) undermined the smooth operation of health-care markets. 
C) made it more costly for persons without a job to obtain health insurance. 
D) done all of the above.

Question 5

Economic theory indicates that as a larger share of medical services are paid for by a third party (for example,insurance companies or the government)rather than directly by the consumer,

Accepted Answer

A) consumers will have a stronger incentive to economize. 
B) consumers will have a weaker incentive to economize and the prices of medical services will rise more rapidly than would otherwise be the case. 
C) consumers will have a weaker incentive to economize,but medical service suppliers will have a stronger incentive to keep prices low. 
D) the suppliers of medical services will have more incentive to economize. 
A) consumers will have a stronger incentive to economize. 
B) consumers will have a weaker incentive to economize and the prices of medical services will rise more rapidly than would otherwise be the case. 
C) consumers will have a weaker incentive to economize,but medical service suppliers will have a stronger incentive to keep prices low. 
D) the suppliers of medical services will have more incentive to economize.

Question 6

When the 2010 Patient Protection and Affordable Care Act is fully implemented,it will

Accepted Answer

A) set the prices (reimbursement rates)for more than 7,000 different medical procedures. 
B) increase the supply of doctors and other medical services 
C) increase the supply of doctors and other medical services. 
D) reduce the share of health care expenses paid for by a third party,which will increase the incentive of both consumers and medical providers to economize. 
E) All of the above are true. 
A) set the prices (reimbursement rates)for more than 7,000 different medical procedures. 
B) increase the supply of doctors and other medical services 
C) increase the supply of doctors and other medical services. 
D) reduce the share of health care expenses paid for by a third party,which will increase the incentive of both consumers and medical providers to economize. 
E) All of the above are true.

Question 7

Which of the following would encourage consumers to economize on health-care expenditures and producers to supply health-care services more efficiently?

Accepted Answer

A) an increase in out-of-pocket expenditures by health-care consumers 
B) decreased reliance on personal Medical Savings Accounts and health-care expenditures from the accounts 
C) decreased reliance on the purchase of catastrophic health insurance coverage and less reliance on insurance with first-dollar coverage and small co-payments 
D) the establishment of a national health-care system that would provide coverage to all people 
A) an increase in out-of-pocket expenditures by health-care consumers 
B) decreased reliance on personal Medical Savings Accounts and health-care expenditures from the accounts 
C) decreased reliance on the purchase of catastrophic health insurance coverage and less reliance on insurance with first-dollar coverage and small co-payments 
D) the establishment of a national health-care system that would provide coverage to all people

Question 8

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

Accepted Answer

A) the share of healthcare expenditures financed by third parties 
B) the prices of healthcare relative to the prices of other goods and services 
C) expenditures on healthcare as a share of the economy 
D) all of the above 
A) the share of healthcare expenditures financed by third parties 
B) the prices of healthcare relative to the prices of other goods and services 
C) expenditures on healthcare as a share of the economy 
D) all of the above

Question 9

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

A) No;the quantity of health-care service demanded is not influenced by either the price of health care or who is paying for it. 
B) Yes;consumers of health care will have a stronger incentive to economize when they are buying the service with their own money. 
C) Yes;consumers of health-care services will have a stronger incentive to economize when the services are paid for by a third party. 
D) No;health care is an essential service,and therefore,the incentive to economize on it is unaffected by who is paying for the service. 
A) No;the quantity of health-care service demanded is not influenced by either the price of health care or who is paying for it. 
B) Yes;consumers of health care will have a stronger incentive to economize when they are buying the service with their own money. 
C) Yes;consumers of health-care services will have a stronger incentive to economize when the services are paid for by a third party. 
D) No;health care is an essential service,and therefore,the incentive to economize on it is unaffected by who is paying for the service.

Question 10

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

Accepted Answer

A) the total expenditures (including those made by the third party)on the good will decline. 
B) the demand for the good will decrease. 
C) consumers will have a stronger incentive to economize on their use of the good. 
D) suppliers will have less incentive to provide the good at low prices. 
A) the total expenditures (including those made by the third party)on the good will decline. 
B) the demand for the good will decrease. 
C) consumers will have a stronger incentive to economize on their use of the good. 
D) suppliers will have less incentive to provide the good at low prices.

Question 11

During the 1965-2009 period,the price index of healthcare services

Accepted Answer

A) declined slightly relative to the overall consumer price index. 
B) fell by approximately 50 percent compared to the overall consumer price index. 
C) increased at twice the rate of the overall consumer price index. 
D) rose during a brief period following the passage of Medicare and Medicaid but has been relatively stable since that time. 
A) declined slightly relative to the overall consumer price index. 
B) fell by approximately 50 percent compared to the overall consumer price index. 
C) increased at twice the rate of the overall consumer price index. 
D) rose during a brief period following the passage of Medicare and Medicaid but has been relatively stable since that time.

Question 12

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

A) The demand for health-care services will decrease. 
B) The prices of health-care services will grow less rapidly than has been the case during the last three decades. 
C) The real (adjusted for inflation)expenditures on Medicare and the taxes to finance the program will tend to decline. 
D) The health-care inflation and spending growth of recent decades will continue or even accelerate. 
A) The demand for health-care services will decrease. 
B) The prices of health-care services will grow less rapidly than has been the case during the last three decades. 
C) The real (adjusted for inflation)expenditures on Medicare and the taxes to finance the program will tend to decline. 
D) The health-care inflation and spending growth of recent decades will continue or even accelerate.

Question 13

(I)The Medicare program is financed by general tax revenue and provides low-income families with access to health care either free or at a low cost. (II)The Medicaid program covers the bulk of the health-care costs of the elderly and is financed mostly through a tax on the wages and salaries of current workers.

Accepted Answer

A) I is true;II is false. 
B) I is false;II is true. 
C) Both I and II are true. 
D) Both I and II are false. 
A) I is true;II is false. 
B) I is false;II is true. 
C) Both I and II are true. 
D) Both I and II are false.

Question 14

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

Accepted Answer

A) on Medicare have grown rapidly,but the real expenditures on Medicaid have been virtually constant. 
B) on the Medicare program have been virtually constant but the real expenditures on Medicaid have increased substantially. 
C) on both Medicare and Medicaid have increased substantially. 
D) on both Medicare and Medicaid have been virtually constant. 
A) on Medicare have grown rapidly,but the real expenditures on Medicaid have been virtually constant. 
B) on the Medicare program have been virtually constant but the real expenditures on Medicaid have increased substantially. 
C) on both Medicare and Medicaid have increased substantially. 
D) on both Medicare and Medicaid have been virtually constant.

Question 15

The growth rate of the elderly population will accelerate in the future as the baby boomers move into the retirement phase of life during the years following 2010.Unless structural changes are undertaken,this increase in the growth rate of the elderly population

Accepted Answer

A) will cause future health-care prices and expenditures to increase even more rapidly than in the past. 
B) will cause future health-care prices and expenditures to decrease rapidly. 
C) will cause the rate of technological advance in medicine to slow significantly. 
D) is generally expected to have no significant impact on the health-care industry. 
A) will cause future health-care prices and expenditures to increase even more rapidly than in the past. 
B) will cause future health-care prices and expenditures to decrease rapidly. 
C) will cause the rate of technological advance in medicine to slow significantly. 
D) is generally expected to have no significant impact on the health-care industry.

Question 16

When the 2010 Patient Protection and Affordable Care Act is fully implemented,it will

Accepted Answer

A) substantially reduce the share of health care expenses paid by a third party. 
B) require all Americans to purchase health care insurance from either a private or government source. 
C) increase the competitiveness of the health insurance business by allowing people to purchase the insurance across state boundaries. 
D) reduce the demand for health care and thereby lead to lower prices for health care services. 
A) substantially reduce the share of health care expenses paid by a third party. 
B) require all Americans to purchase health care insurance from either a private or government source. 
C) increase the competitiveness of the health insurance business by allowing people to purchase the insurance across state boundaries. 
D) reduce the demand for health care and thereby lead to lower prices for health care services.

Question 17

The only two options to control the growth of healthcare spending are

Accepted Answer

A) price controls and political rationing or competition and market prices. 
B) taxation or political mandates. 
C) subsidizing of healthcare insurance or government provision of healthcare. 
D) free healthcare or subsidized healthcare. 
A) price controls and political rationing or competition and market prices. 
B) taxation or political mandates. 
C) subsidizing of healthcare insurance or government provision of healthcare. 
D) free healthcare or subsidized healthcare.

Question 18

Which of the following is true regarding employer-provided health insurance?

Accepted Answer

A) About two-thirds of nonelderly adults have health insurance through group plans offered by their employers. 
B) Employee compensation in the form of health insurance is not subject to taxation,which makes it particularly attractive for people to purchase it through their employers rather than privately,and also to demand policies with small co-payment rates and a low deductible. 
C) The linking of health insurance to employment reduces employee mobility and creates a situation where employees lose their health insurance when they lose their job or change jobs. 
D) All of the above are true. 
A) About two-thirds of nonelderly adults have health insurance through group plans offered by their employers. 
B) Employee compensation in the form of health insurance is not subject to taxation,which makes it particularly attractive for people to purchase it through their employers rather than privately,and also to demand policies with small co-payment rates and a low deductible. 
C) The linking of health insurance to employment reduces employee mobility and creates a situation where employees lose their health insurance when they lose their job or change jobs. 
D) All of the above are true.

Question 19

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

Accepted Answer

A) a hair-growing treatment provided to a twenty-five year-old single man 
B) heart bypass surgery provided to an employee and paid for by employer-funded insurance 
C) a vaccine that reduces the incidence of a communicable disease 
D) a hip replacement provided to a senior citizen 
A) a hair-growing treatment provided to a twenty-five year-old single man 
B) heart bypass surgery provided to an employee and paid for by employer-funded insurance 
C) a vaccine that reduces the incidence of a communicable disease 
D) a hip replacement provided to a senior citizen

Question 20

If a third party pays for an individual to consume a good,how is the decision making of consumers affected? How does this affect the actions of suppliers?

Accepted Answer

When spending their own money,consumers

Exam 37: The Economics of Healthcare

In 2007,third-party payments accounted for approximately what percent of medical-care expenditures in the United States?

Growth in the share of health-care expenditures covered by third parties (for example,insurance or government programs)will

Special savings accounts that individuals could pay into directly and then use to pay medical bills or purchase a catastrophic health insurance plan are known as

By promoting third-party payment of health-care expenses and the purchase of health insurance through employers,health-care policy has

Economic theory indicates that as a larger share of medical services are paid for by a third party (for example,insurance companies or the government)rather than directly by the consumer,

When the 2010 Patient Protection and Affordable Care Act is fully implemented,it will

Which of the following would encourage consumers to economize on health-care expenditures and producers to supply health-care services more efficiently?

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

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)?

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

During the 1965-2009 period,the price index of healthcare services

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?

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

The growth rate of the elderly population will accelerate in the future as the baby boomers move into the retirement phase of life during the years following 2010.Unless structural changes are undertaken,this increase in the growth rate of the elderly population

When the 2010 Patient Protection and Affordable Care Act is fully implemented,it will

The only two options to control the growth of healthcare spending are

Which of the following is true regarding employer-provided health insurance?

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

If a third party pays for an individual to consume a good,how is the decision making of consumers affected? How does this affect the actions of suppliers?

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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