Exam 7: The Economics of Health Care

Under the Patient Protection and Affordable Care Act (ACA), insurance companies are required to participate in a high-risk pool that will cover individuals with pre-existing medical conditions.

Of the following high-income countries, which has the highest infant mortality rate?

One reason why adverse selection problems arise in health insurance markets is that

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?

Changes in the health of the average person are an important indicator of changes in the standard of living.

Article Summary An Organisation for Economic Co-operation and Development (OECD) report states that administration costs for health care in the United States are the highest in the developed world, accounting for over 8 percent of spending in the health care sector, compared to a global average of about 3 percent. According to the report, expensive surgeries, high pharmaceutical costs, and corrupt practices increased global health care costs, and poor coordination between health care providers, duplication of tasks, and excessive time spent on paperwork all contributed to higher administrative costs. The report also noted that administrative costs are generally lower under government-managed health care systems than with private insurance, but governments could still significantly cut spending and improve patients' health. Source: Alanna Petroff, "U.S. health care admin costs are double the average," money.cnn.com, January 11 2017. -Basic supply and demand analysis indicates that having firms rather than the government provide health insurance to workers

Uninsured patients receiving treatments at hospital emergency rooms that could have been provided less expensively at doctors' offices account for ________ of health care costs in the United States.

Because consumers who have insurance provided by their employers usually only pay a deductible for a visit to the doctor's office,

The Congressional Budget Office estimates that the payments to settle malpractice lawsuits and the premiums doctors pay for malpractice insurance account for ________ of health care costs in the United States.

What is adverse selection?

What is the main difference between a single-payer health care system and socialized medicine?

Most employees ________ pay taxes on the value of health insurance provided by employers, and most people ________ get a tax break when buying individual health insurance policies.

Health care makes up ________ of the U.S.economy.

In the United States, total health care spending per person has been ________, and out-of-pocket spending on health care per person has been ________.

Consider a used car market in which half the cars are good and half are bad (lemons).If buyers are rational, the prices being offered for used cars will result in

Suppose consumers pay less than the true cost of medical services because a third party, such as an insurance company, pays most of the bill.Draw a graph showing the supply and demand for medical services with and without a third-party payer.Identify the market equilibrium without insurance, the market equilibrium with insurance, and the area representing the deadweight loss.Be sure to label the efficient and the market prices and quantities.

What is adverse selection?

Figure 7-2 Figure 7-2 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 7-2.With insurance and a third-party payer system, what is the amount of the deadweight loss?

The U.S.Bureau of Labor Statistics forecasts that ________ fastest-growing occupations over the next 10 years will be in health care.

Figure 7-2 Figure 7-2 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 7-2.The efficient quantity of medical services is