Question 1

About what percentage of total health care spending went to doctors and hospitals (excluding nursing homes) in 2014?

Accepted Answer

A)  67 percent 
B)  52 percent 
C)  33 percent 
D)  21 percent 
A)  67 percent 
B)  52 percent 
C)  33 percent 
D)  21 percent

Question 2

Defensive medicine refers to the idea that

Accepted Answer

A)  it is more cost-efficient to prevent illnesses than to cure them. 
B)  physicians may require unnecessary testing as a means of protecting themselves against malpractice suits. 
C)  doctors know much more about diagnosing and treating illnesses than do health care consumers. 
D)  physicians do not advertise their services or fees. 
A)  it is more cost-efficient to prevent illnesses than to cure them. 
B)  physicians may require unnecessary testing as a means of protecting themselves against malpractice suits. 
C)  doctors know much more about diagnosing and treating illnesses than do health care consumers. 
D)  physicians do not advertise their services or fees.

Question 3

Some insurance companies have teamed with hospitals and doctors to provide discounts for their services. The lists of cooperating doctors and hospitals are known as

Accepted Answer

A)  health maintenance organizations. 
B)  preferred provider organizations. 
C)  diagnosis-related groups. 
D)  health alliances. 
A)  health maintenance organizations. 
B)  preferred provider organizations. 
C)  diagnosis-related groups. 
D)  health alliances.

Question 4

One of the peculiarities of the U.S. market for health care is

Accepted Answer

A)  third-party payments by insurance companies. 
B)  government-provided health insurance. 
C)  government tax credits and vouchers for consumers to pay for health care. 
D)  fee-for-service payments for all physician visits. 
A)  third-party payments by insurance companies. 
B)  government-provided health insurance. 
C)  government tax credits and vouchers for consumers to pay for health care. 
D)  fee-for-service payments for all physician visits.

Question 5

Insurance exchanges

Accepted Answer

A)  are government-regulated markets where individuals can purchase health insurance to satisfy the personal mandate provision of the PPACA. 
B)  are expected to significantly increase health care costs by expanding government regulation. 
C)  are government-regulated markets where prices are set directly by federal regulators. 
D)  allow patients to get medical treatment when away from the providers covered by their regular health insurance. 
A)  are government-regulated markets where individuals can purchase health insurance to satisfy the personal mandate provision of the PPACA. 
B)  are expected to significantly increase health care costs by expanding government regulation. 
C)  are government-regulated markets where prices are set directly by federal regulators. 
D)  allow patients to get medical treatment when away from the providers covered by their regular health insurance.

Question 6

The experiences of Singapore, Whole Foods Markets, and the State of Indiana all point to one major factor that could reduce, if not eliminate, overconsumption of health care. And that is

Accepted Answer

A)  reducing the coverage of insured illnesses. 
B)  high out-of-pocket costs to consumers. 
C)  raising the health-insurance premiums. 
D)  privatizing health insurance. 
A)  reducing the coverage of insured illnesses. 
B)  high out-of-pocket costs to consumers. 
C)  raising the health-insurance premiums. 
D)  privatizing health insurance.

Question 7

If an individual is less careful about avoiding accidents or illness because she has health insurance, this is an example of

Accepted Answer

A)  the free-rider problem. 
B)  the moral hazard problem. 
C)  the adverse selection problem. 
D)  the Coase theorem. 
A)  the free-rider problem. 
B)  the moral hazard problem. 
C)  the adverse selection problem. 
D)  the Coase theorem.

Question 8

Which of the following is a nationwide Federal health care program available to Social Security beneficiaries and persons with disabilities?

Accepted Answer

A)  Medicaid 
B)  Medicare 
C)  PPOs 
D)  HMOs 
A)  Medicaid 
B)  Medicare 
C)  PPOs 
D)  HMOs

Question 9

One major difference between PPOs (preferred providers organizations) and HMOs (health maintenance organizations) is that

Accepted Answer

A)  PPOs set rates for various medical services or procedures, while HMOs allow their doctors and clinics to set their own rates. 
B)  PPOs seek to reduce health care costs by controlling prices, while HMOs seek to reduce costs by restricting quantity consumed. 
C)  HMOs employ their own physicians or contract for specialized services with outside providers, while PPOs have arrangements with a network of providers. 
D)  HMOs seek to reduce costs by capping the rates for various services, while PPOs seek to ration health care by having waiting periods. 
A)  PPOs set rates for various medical services or procedures, while HMOs allow their doctors and clinics to set their own rates. 
B)  PPOs seek to reduce health care costs by controlling prices, while HMOs seek to reduce costs by restricting quantity consumed. 
C)  HMOs employ their own physicians or contract for specialized services with outside providers, while PPOs have arrangements with a network of providers. 
D)  HMOs seek to reduce costs by capping the rates for various services, while PPOs seek to ration health care by having waiting periods.

Question 10

Why is there an asymmetric information problem in the market for health care?

Accepted Answer

A)  The patient, not the physician, knows most about the amount and type of health care to be provided. 
B)  The government, not the physician, knows most about the amount and type of health care to be provided. 
C)  Insurance companies, not the physician, know most about the type of health care to be provided. 
D)  The physician, not the patient, knows most about the amount and type of health care to be provided. 
A)  The patient, not the physician, knows most about the amount and type of health care to be provided. 
B)  The government, not the physician, knows most about the amount and type of health care to be provided. 
C)  Insurance companies, not the physician, know most about the type of health care to be provided. 
D)  The physician, not the patient, knows most about the amount and type of health care to be provided.

Question 11

One special feature about health care services is that society regards them as

Accepted Answer

A)  private goods. 
B)  an entitlement. 
C)  something to be rationed by price and ability to pay. 
D)  normal goods. 
A)  private goods. 
B)  an entitlement. 
C)  something to be rationed by price and ability to pay. 
D)  normal goods.

Question 12

Insurance companies use deductibles and copayments to

Accepted Answer

A)  increase access to health care. 
B)  reduce health care costs by discouraging overuse of the health care system. 
C)  prevent small companies from self-insuring their workers. 
D)  keep government out of the health care insurance industry. 
A)  increase access to health care. 
B)  reduce health care costs by discouraging overuse of the health care system. 
C)  prevent small companies from self-insuring their workers. 
D)  keep government out of the health care insurance industry.

Question 13

The price elasticity of demand for health care is

Accepted Answer

A)  perfectly inelastic. 
B)  relatively inelastic. 
C)  relatively elastic. 
D)  perfectly elastic. 
A)  perfectly inelastic. 
B)  relatively inelastic. 
C)  relatively elastic. 
D)  perfectly elastic.

Question 14

Rising health care costs have prompted workers to change jobs with greater frequency.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is true about health care costs in the United States?

Accepted Answer

A)  Costs have risen because increases in the price of health care have more than offset reductions in the quantity of health care provided. 
B)  Costs have risen because increases in the quantity of care provided have more than offset price reductions realized through economies of scale. 
C)  Costs have risen because both the price of health care and the quantity provided have risen. 
D)  Costs have remained relatively stable as price increases have been largely offset by reductions in the quantity provided. 
A)  Costs have risen because increases in the price of health care have more than offset reductions in the quantity of health care provided. 
B)  Costs have risen because increases in the quantity of care provided have more than offset price reductions realized through economies of scale. 
C)  Costs have risen because both the price of health care and the quantity provided have risen. 
D)  Costs have remained relatively stable as price increases have been largely offset by reductions in the quantity provided.

Question 16

The fundamental problem associated with the U.S. health care system is that

Accepted Answer

A)  the financing of health care through insurance has resulted in the underallocation of resources to the health care industry. 
B)  frivolous malpractice suits have increased malpractice insurance premiums for doctors. 
C)  at the margin, the value of health care services may be less than the value of alternative goods and services. 
D)  there are too many general practitioners and not enough specialists. 
A)  the financing of health care through insurance has resulted in the underallocation of resources to the health care industry. 
B)  frivolous malpractice suits have increased malpractice insurance premiums for doctors. 
C)  at the margin, the value of health care services may be less than the value of alternative goods and services. 
D)  there are too many general practitioners and not enough specialists.

Question 17

Rising health care costs have the following implications, except

Accepted Answer

A)  faster growth of wages to workers. 
B)  a growing number of uninsured workers. 
C)  large numbers of personal bankruptcies. 
D)  outsourcing and off-shoring of firms' operations. 
A)  faster growth of wages to workers. 
B)  a growing number of uninsured workers. 
C)  large numbers of personal bankruptcies. 
D)  outsourcing and off-shoring of firms' operations.

Question 18

The major objective of Medicaid is to

Accepted Answer

A)  provide health care services to the aged. 
B)  provide health care services to those receiving public assistance. 
C)  contain rising health care costs. 
D)  make a basic health care package available to all Americans. 
A)  provide health care services to the aged. 
B)  provide health care services to those receiving public assistance. 
C)  contain rising health care costs. 
D)  make a basic health care package available to all Americans.

Question 19

Which person would most likely be eligible to receive Medicare?

Accepted Answer

A)  a student attending a state university 
B)  a person receiving Social Security benefits 
C)  a part-time worker at a manufacturing company 
D)  a U.S. college professor teaching in another country 
A)  a student attending a state university 
B)  a person receiving Social Security benefits 
C)  a part-time worker at a manufacturing company 
D)  a U.S. college professor teaching in another country

Question 20

Preferred provider organizations (PPOs) are a type of managed-care organization.

Accepted Answer

A) True 
 B)False

Exam 24: Health Care

About what percentage of total health care spending went to doctors and hospitals (excluding nursing homes) in 2014?

Defensive medicine refers to the idea that

Some insurance companies have teamed with hospitals and doctors to provide discounts for their services. The lists of cooperating doctors and hospitals are known as

One of the peculiarities of the U.S. market for health care is

Insurance exchanges

The experiences of Singapore, Whole Foods Markets, and the State of Indiana all point to one major factor that could reduce, if not eliminate, overconsumption of health care. And that is

If an individual is less careful about avoiding accidents or illness because she has health insurance, this is an example of

Which of the following is a nationwide Federal health care program available to Social Security beneficiaries and persons with disabilities?

One major difference between PPOs (preferred providers organizations) and HMOs (health maintenance organizations) is that

Why is there an asymmetric information problem in the market for health care?

One special feature about health care services is that society regards them as

Insurance companies use deductibles and copayments to

The price elasticity of demand for health care is

Rising health care costs have prompted workers to change jobs with greater frequency.

Which of the following statements is true about health care costs in the United States?

The fundamental problem associated with the U.S. health care system is that

Rising health care costs have the following implications, except

The major objective of Medicaid is to

Which person would most likely be eligible to receive Medicare?

Preferred provider organizations (PPOs) are a type of managed-care organization.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

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Pure Competition in the Short Run

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The Demand for Resources

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The Balance of Payments, Exchange Rates, and Trade Deficits

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