Question 1

A flat premium for all risk types will lead to

Accepted Answer

A) Adverse selection 
B) Moral hazard 
C) Both a and b 
D) Neither a nor b 
A) Adverse selection 
B) Moral hazard 
C) Both a and b 
D) Neither a nor b A

Question 2

Explain why insurance companies may be hesitant to increase relative premiums.

Accepted Answer

Health plans that increase their relative premiums will tend to see their risk pools deteriorate as younger,more price-sensitive,lower-risk enrollees leave for lower priced plans.
Because older enrollees,who have a higher health risk and who are more costly to insure,are less likely to switch health plans in response to premium increases,insurers who increase their premiums (relative to their competitors)will not only lose market share but will also experience higher claims cost,as the younger,healthier,enrollees switch to lower-cost plans.
In the absence of risk-adjusted premiums,price competition among insurers will increase as insurers compete on price both to gain market share and to attract lower-risk enrollees.

Question 3

Commercial insurers who use a(n)_____________ rating can steal ________ risk individuals from Blue Cross and Blue Shield and reduce cost.

Accepted Answer

A) Community;high 
B) Community;low 
C) Experience;high 
D) Experience;low 
A) Community;high 
B) Community;low 
C) Experience;high 
D) Experience;low D

Question 4

Health insurance enrollees are less likely to change their health insurance carrier when

Accepted Answer

A) Administrative costs are high 
B) Administrative costs are low 
C) Switching costs are high 
D) Switching costs are low 
A) Administrative costs are high 
B) Administrative costs are low 
C) Switching costs are high 
D) Switching costs are low

Question 5

Monopsony power by health insurance plans can lead to

Accepted Answer

A) Fewer providers and higher quality of care 
B) Fewer providers and lower quality of care 
C) More providers and higher quality of care 
D) More providers and lower quality of care 
A) Fewer providers and higher quality of care 
B) Fewer providers and lower quality of care 
C) More providers and higher quality of care 
D) More providers and lower quality of care

Question 6

Blue Cross and Blue Shield uses

Accepted Answer

A) Experience rating premiums 
B) Community rating premiums 
C) Uniform rating premiums 
A) Experience rating premiums 
B) Community rating premiums 
C) Uniform rating premiums

Question 7

The Health Insurance Portability and Accountability Act allows all the following except

Accepted Answer

A) Portability 
B) Limitations on preexisting exclusions 
C) Guaranteed renewal 
D) Reduced the tax deductibility of health insurance premiums 
A) Portability 
B) Limitations on preexisting exclusions 
C) Guaranteed renewal 
D) Reduced the tax deductibility of health insurance premiums

Question 8

Are high concentration ratios indicative of market power in the health insurance industry?

Accepted Answer

A recent study examined the relationship

Question 9

Do high concentration ratios have an effect on input prices?

Accepted Answer

The study by Dafny,et.al.found that cons

Question 10

Assume a high-risk;person has a 0.50 probability of a $500 medical expense and a low-risk person has a 0.10 probability of a $500 medical expense.Both types of people are risk averse.What is the community rating premium for a neighborhood containing exactly half of each type of person?

Accepted Answer

A) $300 
B) $250 
C) $150 
D) $50 
A) $300 
B) $250 
C) $150 
D) $50

Question 11

Firms self-insure to

Accepted Answer

A) Save money on premiums. 
B) Avoid state insurance regulation. 
C) Create uniform benefit packages for employees who live in different states. 
D) All of the above. 
A) Save money on premiums. 
B) Avoid state insurance regulation. 
C) Create uniform benefit packages for employees who live in different states. 
D) All of the above.

Question 12

A strong individual mandate with large fines is __________ by insurers because it will _______ adverse selection.

Accepted Answer

A) Supported;reduce 
B) Supported;increase 
C) Not supported;reduce 
D) Not supported;increase 
A) Supported;reduce 
B) Supported;increase 
C) Not supported;reduce 
D) Not supported;increase

Question 13

Assume a high-risk person;has a 0.50 probability of a $500 medical expense and a low-risk person has a 0.10 probability of a $500 medical expense.Both types of people are risk neutral.What is the community rating premium for a neighborhood containing exactly half of each type of person?

Accepted Answer

A) $300 
B) $250 
C) $150 
D) $50 
A) $300 
B) $250 
C) $150 
D) $50

Question 14

A risk-averse consumer faces a 0.60 probability of health expenditures equal to $10,000 and zero expenditures otherwise.She can purchase a health insurance policy that will cover all her actual health costs for $6,000.It follows that

Accepted Answer

A) She will definitely not buy the health insurance policy 
B) She will possibly buy the health insurance policy 
C) She will definitely buy the health insurance policy 
A) She will definitely not buy the health insurance policy 
B) She will possibly buy the health insurance policy 
C) She will definitely buy the health insurance policy

Question 15

Assume the health insurance market is perfectly competitive.If the benefit/premium ratio is 0.90 and the premium is $1,000,how much are administrative cost?

Accepted Answer

If the benefit/premium ratio i

Question 16

Which of the following gave Blue Cross cost advantages compared to commercial health insurers?

Accepted Answer

A) Tax exemption 
B) Economies of scale 
C) Both a and b 
D) Neither a nor b 
A) Tax exemption 
B) Economies of scale 
C) Both a and b 
D) Neither a nor b

Question 17

Explain why the use of community-rated premiums leads to economic inefficiencies.

Accepted Answer

Similar to an excise tax that is placed

Question 18

A movement of the medical loss ratio from .6 to .8 indicates an

Accepted Answer

A) Increase in administrative cost per enrollee 
B) Decrease in administrative cost per enrollee 
C) No difference in administrative cost per enrollee 
A) Increase in administrative cost per enrollee 
B) Decrease in administrative cost per enrollee 
C) No difference in administrative cost per enrollee

Question 19

Premiums based on experience ratings

Accepted Answer

A) Are uniform across age groups. 
B) Are based on the loss experience of the insured. 
C) Vary depending on the income of the insured. 
D) Are illegal in most states in the United States 
E) Are only used in property-casualty insurance underwriting. 
A) Are uniform across age groups. 
B) Are based on the loss experience of the insured. 
C) Vary depending on the income of the insured. 
D) Are illegal in most states in the United States 
E) Are only used in property-casualty insurance underwriting.

Question 20

If the health insurance premium is equal to $2,000 and administrative fees are $500,then what is the benefit/premium ratio?

Accepted Answer

A) .25 
B) .50 
C) .75 
D) Cannot be calculated with the above information 
A) .25 
B) .50 
C) .75 
D) Cannot be calculated with the above information

A flat premium for all risk types will lead to

Explain why insurance companies may be hesitant to increase relative premiums.

Commercial insurers who use a(n)_____ rating can steal risk individuals from Blue Cross and Blue Shield and reduce cost.

Health insurance enrollees are less likely to change their health insurance carrier when

Monopsony power by health insurance plans can lead to

Blue Cross and Blue Shield uses

The Health Insurance Portability and Accountability Act allows all the following except

Are high concentration ratios indicative of market power in the health insurance industry?

Do high concentration ratios have an effect on input prices?

Assume a high-risk;person has a 0.50 probability of a $500 medical expense and a low-risk person has a 0.10 probability of a $500 medical expense.Both types of people are risk averse.What is the community rating premium for a neighborhood containing exactly half of each type of person?

Firms self-insure to

A strong individual mandate with large fines is ____ by insurers because it will _ adverse selection.

Assume a high-risk person;has a 0.50 probability of a $500 medical expense and a low-risk person has a 0.10 probability of a $500 medical expense.Both types of people are risk neutral.What is the community rating premium for a neighborhood containing exactly half of each type of person?

A risk-averse consumer faces a 0.60 probability of health expenditures equal to $10,000 and zero expenditures otherwise.She can purchase a health insurance policy that will cover all her actual health costs for $6,000.It follows that

Assume the health insurance market is perfectly competitive.If the benefit/premium ratio is 0.90 and the premium is $1,000,how much are administrative cost?

Which of the following gave Blue Cross cost advantages compared to commercial health insurers?

Explain why the use of community-rated premiums leads to economic inefficiencies.

A movement of the medical loss ratio from .6 to .8 indicates an

Premiums based on experience ratings

If the health insurance premium is equal to $2,000 and administrative fees are $500,then what is the benefit/premium ratio?

An Introduction to the Economics of Medical Care

The Role of Government in Health and Medical Care

Health Policy and the Legislative Marketplace

The Production of Health: the Impact of Medical Services on Health

An Overview of the Medical Care Sector

The Demand for Medical Care

The Demand for Health Insurance

The Supply of Medical Care: an Overview

Market Competition in Medical Care

The Physician Services Market

The Market for Hospital Services

The Pharmaceutical Industry

Health Manpower Shortages and Surpluses: Definitions, measurement, and Policies

The Market for Physician Manpower

The Market for Medical Education: Equity and Efficiency

The Market for Registered Nurses

National Health Insurance: an Approach to the Redistribution of Medical Care

Filters

Exam 10: The Market for Health Insurance: Its Performance and Structure

A flat premium for all risk types will lead to

Explain why insurance companies may be hesitant to increase relative premiums.

Commercial insurers who use a(n)_____________ rating can steal ________ risk individuals from Blue Cross and Blue Shield and reduce cost.

Health insurance enrollees are less likely to change their health insurance carrier when

Monopsony power by health insurance plans can lead to

Blue Cross and Blue Shield uses

The Health Insurance Portability and Accountability Act allows all the following except

Are high concentration ratios indicative of market power in the health insurance industry?

Do high concentration ratios have an effect on input prices?

Assume a high-risk;person has a 0.50 probability of a $500 medical expense and a low-risk person has a 0.10 probability of a $500 medical expense.Both types of people are risk averse.What is the community rating premium for a neighborhood containing exactly half of each type of person?

Firms self-insure to

A strong individual mandate with large fines is __________ by insurers because it will _______ adverse selection.

Assume a high-risk person;has a 0.50 probability of a $500 medical expense and a low-risk person has a 0.10 probability of a $500 medical expense.Both types of people are risk neutral.What is the community rating premium for a neighborhood containing exactly half of each type of person?

A risk-averse consumer faces a 0.60 probability of health expenditures equal to $10,000 and zero expenditures otherwise.She can purchase a health insurance policy that will cover all her actual health costs for $6,000.It follows that

Assume the health insurance market is perfectly competitive.If the benefit/premium ratio is 0.90 and the premium is $1,000,how much are administrative cost?

Which of the following gave Blue Cross cost advantages compared to commercial health insurers?

Explain why the use of community-rated premiums leads to economic inefficiencies.

A movement of the medical loss ratio from .6 to .8 indicates an

Premiums based on experience ratings

If the health insurance premium is equal to $2,000 and administrative fees are $500,then what is the benefit/premium ratio?

An Introduction to the Economics of Medical Care

The Role of Government in Health and Medical Care

Health Policy and the Legislative Marketplace

The Production of Health: the Impact of Medical Services on Health

An Overview of the Medical Care Sector

The Demand for Medical Care

The Demand for Health Insurance

The Supply of Medical Care: an Overview

Market Competition in Medical Care

The Physician Services Market

The Market for Hospital Services

The Pharmaceutical Industry

Health Manpower Shortages and Surpluses: Definitions, measurement, and Policies

The Market for Physician Manpower

The Market for Medical Education: Equity and Efficiency

The Market for Registered Nurses

National Health Insurance: an Approach to the Redistribution of Medical Care

Filters

Commercial insurers who use a(n)_____ rating can steal risk individuals from Blue Cross and Blue Shield and reduce cost.

A strong individual mandate with large fines is ____ by insurers because it will _ adverse selection.