Question 1

Under the current structure of Medicare,the movement of the baby boom generation into the retirement phase of life during the years following 2011 will

Accepted Answer

A) increase the demand for medical services and the share of those services financed by third parties. 
B) push both healthcare prices and expenditures upward. 
C) cause Medicare expenditures to increase and necessitate the need for higher taxes to finance the program. 
D) do all of the above. 
A) increase the demand for medical services and the share of those services financed by third parties. 
B) push both healthcare prices and expenditures upward. 
C) cause Medicare expenditures to increase and necessitate the need for higher taxes to finance the program. 
D) do all of the above.

Question 2

During the last four decades,

Accepted Answer

A) the total expenditures of Americans on health care have been relatively constant. 
B) the share of health-care expenditures covered by a third party (either the government or an insurance company)has increased substantially. 
C) the prices of health-care services have risen but not as rapidly as the general level of prices. 
D) health-care providers have lowered prices in response to the rapid increase in medical technology. 
A) the total expenditures of Americans on health care have been relatively constant. 
B) the share of health-care expenditures covered by a third party (either the government or an insurance company)has increased substantially. 
C) the prices of health-care services have risen but not as rapidly as the general level of prices. 
D) health-care providers have lowered prices in response to the rapid increase in medical technology.

Question 3

"When a third party (for example,an insurance company or the government)pays all or most of the cost of a good or service,the incentive of consumers to shop for the best value per dollar spent and of producers to offer the item at an economical price is substantially reduced." This statement is

Accepted Answer

A) essentially true. 
B) false;consumers will still have a strong incentive to search for the most economical price even if someone else is paying the bill. 
C) false;producers will still have a strong incentive to keep prices low even if consumers are non-responsive to price differences among suppliers. 
D) false;the party paying for the good will not influence the incentive of either consumers or producers to economize. 
A) essentially true. 
B) false;consumers will still have a strong incentive to search for the most economical price even if someone else is paying the bill. 
C) false;producers will still have a strong incentive to keep prices low even if consumers are non-responsive to price differences among suppliers. 
D) false;the party paying for the good will not influence the incentive of either consumers or producers to economize.

Question 4

Which of the following contributes to the poor performance of the healthcare industry?

Accepted Answer

A) An increasing share of healthcare costs is paid for directly by consumers. 
B) The tax system discourages the purchase of healthcare through employers,while offering advantages to those who purchase healthcare plans directly. 
C) State regulations often force insurers to cover items such as in-vitro fertilization,drug rehabilitation,and marriage counseling,which drive up insurance costs. 
D) State regulations make it attractive for health insurers to provide only low-cost,catastrophic health insurance. 
A) An increasing share of healthcare costs is paid for directly by consumers. 
B) The tax system discourages the purchase of healthcare through employers,while offering advantages to those who purchase healthcare plans directly. 
C) State regulations often force insurers to cover items such as in-vitro fertilization,drug rehabilitation,and marriage counseling,which drive up insurance costs. 
D) State regulations make it attractive for health insurers to provide only low-cost,catastrophic health insurance.

Question 5

Which of the following is true?

Accepted Answer

A) The growth of third-party payments during the last several decades has helped control inflation in the health-care sector. 
B) Public policy encourages Americans to purchase low deductible/low co-payment health insurance coverage through their employers. 
C) Low deductible health insurance coverage encourages health-care consumers to search for the best prices. 
D) The 2.9 percent Medicare payroll tax is sufficient to cover the cost of the promised future health-care services to senior citizens. 
A) The growth of third-party payments during the last several decades has helped control inflation in the health-care sector. 
B) Public policy encourages Americans to purchase low deductible/low co-payment health insurance coverage through their employers. 
C) Low deductible health insurance coverage encourages health-care consumers to search for the best prices. 
D) The 2.9 percent Medicare payroll tax is sufficient to cover the cost of the promised future health-care services to senior citizens.

Question 6

Have market forces failed in keeping healthcare costs under control?

Accepted Answer

A) Yes;in most high-income countries healthcare is a socialized industry and costs have been kept low. 
B) Yes;the government has allowed market forces to determine costs,yet healthcare spending continues to rise rapidly. 
C) No;government regulations have undermined the operation of markets and created perverse incentives that have led to rising prices and soaring healthcare expenditures. 
D) No;market forces have been allowed to determine costs and those costs have remained low relative to the consumer price index. 
A) Yes;in most high-income countries healthcare is a socialized industry and costs have been kept low. 
B) Yes;the government has allowed market forces to determine costs,yet healthcare spending continues to rise rapidly. 
C) No;government regulations have undermined the operation of markets and created perverse incentives that have led to rising prices and soaring healthcare expenditures. 
D) No;market forces have been allowed to determine costs and those costs have remained low relative to the consumer price index.

Question 7

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

Accepted Answer

A) direct purchase of health insurance becomes cheaper. 
B) the benefits of the healthcare insurance are fully taxable. 
C) it is more costly for employees to switch jobs and move to areas where jobs are available. 
D) the overall number of people without health insurance decreases. 
A) direct purchase of health insurance becomes cheaper. 
B) the benefits of the healthcare insurance are fully taxable. 
C) it is more costly for employees to switch jobs and move to areas where jobs are available. 
D) the overall number of people without health insurance decreases.

Question 8

In 2007,health-care expenditures were approximately what percent of GDP?

Accepted Answer

A) 6 percent 
B) 16 percent 
C) 26 percent 
D) 36 percent 
A) 6 percent 
B) 16 percent 
C) 26 percent 
D) 36 percent

Question 9

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

A) a reduction in expenditures on healthcare as a share of the economy. 
B) an increase in the sensitivity of consumers to the prices of healthcare services. 
C) persistent increases in the prices of healthcare services and rapid growth in the total expenditures on healthcare. 
D) an increase in the incentive of suppliers to provide healthcare services at a low cost. 
A) a reduction in expenditures on healthcare as a share of the economy. 
B) an increase in the sensitivity of consumers to the prices of healthcare services. 
C) persistent increases in the prices of healthcare services and rapid growth in the total expenditures on healthcare. 
D) an increase in the incentive of suppliers to provide healthcare services at a low cost.

Question 10

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

A) Medicaid program that provides healthcare for the poor. 
B) hospitalization costs of Medicare beneficiaries. 
C) cost of physician services supplied to the elderly. 
D) healthcare costs of both the elderly and the poor. 
A) Medicaid program that provides healthcare for the poor. 
B) hospitalization costs of Medicare beneficiaries. 
C) cost of physician services supplied to the elderly. 
D) healthcare costs of both the elderly and the poor.

Question 11

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

Accepted Answer

A) demand for the good will decline. 
B) consumers of the good will have less and less incentive to economize on its use. 
C) suppliers of the good will have a stronger incentive to provide the good at low prices. 
D) prices of the good will tend to decline with the passage of time. 
A) demand for the good will decline. 
B) consumers of the good will have less and less incentive to economize on its use. 
C) suppliers of the good will have a stronger incentive to provide the good at low prices. 
D) prices of the good will tend to decline with the passage of time.

Question 12

Economic theory indicates that the growth of subsidies to healthcare consumers and accompanying expansion in third-party payments will

Accepted Answer

A) lead to higher healthcare prices. 
B) lead to lower healthcare prices. 
C) reduce the incentive of consumers to economize. 
D) increase the incentive of healthcare providers to provide their services at a low cost. 
E) do both a and c above. 
A) lead to higher healthcare prices. 
B) lead to lower healthcare prices. 
C) reduce the incentive of consumers to economize. 
D) increase the incentive of healthcare providers to provide their services at a low cost. 
E) do both a and c above.

Question 13

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

Accepted Answer

A) has remained relatively constant. 
B) fell from approximately 60 percent in 1960 to 30 percent in 2007. 
C) increased from approximately 45 percent in 1960 to over 85 percent in 2007. 
D) declined during the 15 years following the passage of Medicare but has been increasing since 1980. 
A) has remained relatively constant. 
B) fell from approximately 60 percent in 1960 to 30 percent in 2007. 
C) increased from approximately 45 percent in 1960 to over 85 percent in 2007. 
D) declined during the 15 years following the passage of Medicare but has been increasing since 1980.

Question 14

How has public policy influenced the incentives of consumers to economize and suppliers to provide their services economically in the health-care industry?

Accepted Answer

Public policy has generally promoted pay

Question 15

Under the current structure of Medicare,the movement of the baby boom generation into the retirement phase of life during the years following 2011 will

Accepted Answer

A) reduce the overall demand for medical services because the elderly will not have to pay for hospitalization in the future. 
B) place downward pressure on healthcare prices. 
C) cause Medicare expenditures to increase and necessitate the need for higher taxes to finance the program. 
D) do all of the above. 
A) reduce the overall demand for medical services because the elderly will not have to pay for hospitalization in the future. 
B) place downward pressure on healthcare prices. 
C) cause Medicare expenditures to increase and necessitate the need for higher taxes to finance the program. 
D) do all of the above.

Question 16

Which of the following reforms could help to improve the operation and efficiency of health-care markets?

Accepted Answer

A) shifting Medicare at least partially from a reimbursement service to a defined-benefit plan 
B) placing more emphasis on the demand side of the health-care market 
C) encouraging the purchase of health insurance policies with first-dollar coverage and small co-payments 
D) All of the reforms listed above could help to improve the situation. 
A) shifting Medicare at least partially from a reimbursement service to a defined-benefit plan 
B) placing more emphasis on the demand side of the health-care market 
C) encouraging the purchase of health insurance policies with first-dollar coverage and small co-payments 
D) All of the reforms listed above could help to improve the situation.

Question 17

Economic analysis indicates that the increasing government expenditures and growth of third-party payments accompanying the Medicare and Medicaid programs

Accepted Answer

A) reduced the demand for healthcare services. 
B) reduced the incentive of consumers to economize on their use of healthcare. 
C) increased the incentive of consumers to economize on their use of healthcare. 
D) placed downward pressure on the prices of healthcare services. 
A) reduced the demand for healthcare services. 
B) reduced the incentive of consumers to economize on their use of healthcare. 
C) increased the incentive of consumers to economize on their use of healthcare. 
D) placed downward pressure on the prices of healthcare services.

Question 18

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

Accepted Answer

A) total expenditures on healthcare declined. 
B) the incentive of consumers to economize on their use of healthcare services increased. 
C) the incentive of suppliers to provide healthcare services at a low cost increased. 
D) both the prices of healthcare services and total expenditures on those services increased rapidly. 
A) total expenditures on healthcare declined. 
B) the incentive of consumers to economize on their use of healthcare services increased. 
C) the incentive of suppliers to provide healthcare services at a low cost increased. 
D) both the prices of healthcare services and total expenditures on those services increased rapidly.

Question 19

The growth of third-party payments has resulted in higher prices for health-care services because

Accepted Answer

A) the lower out-of-pocket cost for consumers has increased the demand for health-care services. 
B) consumers have less of an incentive to economize and shop for low-cost services when they pay a lower share of their bill. 
C) producers have less of an incentive to provide health-care services at a low price when consumers are not as cost conscious. 
D) All of the above are true. 
A) the lower out-of-pocket cost for consumers has increased the demand for health-care services. 
B) consumers have less of an incentive to economize and shop for low-cost services when they pay a lower share of their bill. 
C) producers have less of an incentive to provide health-care services at a low price when consumers are not as cost conscious. 
D) All of the above are true.

Question 20

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

Accepted Answer

A) Health insurance should not be a tax-deductible expense for anyone. 
B) The system gives preferential tax treatment to self-employed individuals. 
C) The system imposes higher taxes on the direct purchase of health insurance because it is not tax deductible. 
D) The system gives preferential tax treatment to people who purchase health insurance directly from a provider. 
A) Health insurance should not be a tax-deductible expense for anyone. 
B) The system gives preferential tax treatment to self-employed individuals. 
C) The system imposes higher taxes on the direct purchase of health insurance because it is not tax deductible. 
D) The system gives preferential tax treatment to people who purchase health insurance directly from a provider.

Exam 37: The Economics of Healthcare

Under the current structure of Medicare,the movement of the baby boom generation into the retirement phase of life during the years following 2011 will

During the last four decades,

"When a third party (for example,an insurance company or the government)pays all or most of the cost of a good or service,the incentive of consumers to shop for the best value per dollar spent and of producers to offer the item at an economical price is substantially reduced." This statement is

Which of the following contributes to the poor performance of the healthcare industry?

Which of the following is true?

Have market forces failed in keeping healthcare costs under control?

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

In 2007,health-care expenditures were approximately what percent of GDP?

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

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

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

Economic theory indicates that the growth of subsidies to healthcare consumers and accompanying expansion in third-party payments will

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

How has public policy influenced the incentives of consumers to economize and suppliers to provide their services economically in the health-care industry?

Under the current structure of Medicare,the movement of the baby boom generation into the retirement phase of life during the years following 2011 will

Which of the following reforms could help to improve the operation and efficiency of health-care markets?

Economic analysis indicates that the increasing government expenditures and growth of third-party payments accompanying the Medicare and Medicaid programs

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

The growth of third-party payments has resulted in higher prices for health-care services because

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

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

Filters