Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The cost of group health insurance is lower than if an individual buys a policy on his own because

Accepted Answer

A) the problem of adverse selection is reduced. 
B) moral hazard costs of a group tend to move to a low average. 
C) it is easier for the company to deny claims from a large group. 
D) insuring a group eliminates the problem of buyers having more information than the seller. 
A) the problem of adverse selection is reduced. 
B) moral hazard costs of a group tend to move to a low average. 
C) it is easier for the company to deny claims from a large group. 
D) insuring a group eliminates the problem of buyers having more information than the seller.

Question 3

The Congressional Budget Office estimates that the Patient Protection and Affordable Care Act (PPACA)will

Accepted Answer

A) increase government spending by just under $1 trillion over 10 years. 
B) cost the government significantly more than the additional taxes and fees enacted under the law will bring in. 
C) eliminate the budget deficit within 10 years. 
D) actually reduce government spending over a 20 year period. 
A) increase government spending by just under $1 trillion over 10 years. 
B) cost the government significantly more than the additional taxes and fees enacted under the law will bring in. 
C) eliminate the budget deficit within 10 years. 
D) actually reduce government spending over a 20 year period.

Question 4

Suppose a large firm allows its employees to choose whether to participate in its health insurance plan.The firm is trying to decide between two plans: Plan I has a low monthly premium but a high deductible,and Plan II has a high monthly premium but a low deductible.Under which plan is adverse selection likely to be a bigger problem?

Accepted Answer

A) Plan I because it is likely to draw participants who expect high medical costs.This group expects to consume much health care services and therefore prefer low deductibles. 
B) Plan II because it is likely to draw participants who expect high medical costs.Healthy individuals who do not expect to consume much health care services will not be willing to pay the high premiums. 
C) Plan I because it is likely to draw the relatively healthy employees who do not expect to spend much on health care.Because the monthly premiums are low,the insurance company has to bear a bigger financial burden in the event of serious illnesses. 
D) Plan II because it is likely to draw employees who tend to over-consume health care services because of the low deductible.Insurance companies are likely to end up paying out more claims than the premiums they collect. 
A) Plan I because it is likely to draw participants who expect high medical costs.This group expects to consume much health care services and therefore prefer low deductibles. 
B) Plan II because it is likely to draw participants who expect high medical costs.Healthy individuals who do not expect to consume much health care services will not be willing to pay the high premiums. 
C) Plan I because it is likely to draw the relatively healthy employees who do not expect to spend much on health care.Because the monthly premiums are low,the insurance company has to bear a bigger financial burden in the event of serious illnesses. 
D) Plan II because it is likely to draw employees who tend to over-consume health care services because of the low deductible.Insurance companies are likely to end up paying out more claims than the premiums they collect.

Question 5

Of the following,which has most likely contributed the most to the rapid rise in health care costs in the United States?

Accepted Answer

A) the cost of malpractice insurance 
B) the cost to treat uninsured patients 
C) slow growth in labor productivity in health care 
D) the cost of malpractice lawsuit settlements 
A) the cost of malpractice insurance 
B) the cost to treat uninsured patients 
C) slow growth in labor productivity in health care 
D) the cost of malpractice lawsuit settlements

Question 6

Health insurance companies impose deductibles on policies and co-payments on claims to reduce the problem of adverse selection.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following factors help to explain the sustained increases in health care spending in the United States,and which do not:
a.the additional paperwork,duplication,and waste generated in the U.S.health care system compared to systems in other countries
b.the increasing costs of malpractice insurance and malpractice lawsuit settlements
c.the number of uninsured patients receiving hospital treatment that could have been preformed at a lower cost in doctors' offices
d.the slow growth in labor productivity in health care compared to that in the economy as a whole
e.the aging population
f.increases in the cost of providing health care

Accepted Answer

Factors "d","e",and "f" do help explain

Question 8

The largest government-run health care system in the world,with 1.7 million employees,is in

Accepted Answer

A) Canada. 
B) Japan. 
C) the United Kingdom. 
D) the United States. 
A) Canada. 
B) Japan. 
C) the United Kingdom. 
D) the United States.

Question 9

Briefly explain 4 of the difficulties in making cross-country comparisons in health care outcomes.

Accepted Answer

Data problems: Countries do not always c

Question 10

Consider a used car market in which half the cars are good and half are bad (lemons).Suppose the average price of a good car is $9,000 and the average price of a lemon is $3,000.If rational buyers are willing to pay $6,000 for a used car,then sellers will agree to sell mostly the lemons at this price.What is the term used to describe this situation?

Accepted Answer

A) moral hazard 
B) adverse selection 
C) an efficient market 
D) economic irrationality 
A) moral hazard 
B) adverse selection 
C) an efficient market 
D) economic irrationality

Question 11

If a doctor knows that an insurance company will pay for most of a patient's bill,the doctor has more of an incentive to require additional medical procedures and tests,even if the patient may not require them.This is an example of

Accepted Answer

A) moral hazard. 
B) the principle-agent problem. 
C) asymmetric information. 
D) adverse selection. 
A) moral hazard. 
B) the principle-agent problem. 
C) asymmetric information. 
D) adverse selection.

Question 12

When people who buy insurance change their behavior after the purchase because they are protected from loss by the insurance,the insurance market is said to face the problem of

Accepted Answer

A) moral hazard. 
B) adverse selection. 
C) asymmetric information. 
D) economic irrationality. 
A) moral hazard. 
B) adverse selection. 
C) asymmetric information. 
D) economic irrationality.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Health insurance plans which typically reimburse doctors mainly by paying a flat fee per patient are known as

Accepted Answer

A) fee-for-service plans. 
B) preferred provider organizations. 
C) single-health-payer systems. 
D) health maintenance organizations. 
A) fee-for-service plans. 
B) preferred provider organizations. 
C) single-health-payer systems. 
D) health maintenance organizations.

Question 15

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

Accepted Answer

A) sick people are more likely to want health insurance than healthy people. 
B) because of advances in medical technology,people are living longer.These medical advances are costly and drive up the price of insurance for everyone. 
C) the average age of citizens of the United States has increased in recent years,and will continue to increase over the next 20 to 30 years.As older citizens retire,more and more of their medical bills will have to be paid by younger workers. 
D) fewer men and women are choosing medical careers because of the increase in the cost of malpractice insurance. 
A) sick people are more likely to want health insurance than healthy people. 
B) because of advances in medical technology,people are living longer.These medical advances are costly and drive up the price of insurance for everyone. 
C) the average age of citizens of the United States has increased in recent years,and will continue to increase over the next 20 to 30 years.As older citizens retire,more and more of their medical bills will have to be paid by younger workers. 
D) fewer men and women are choosing medical careers because of the increase in the cost of malpractice insurance.

Question 16

An insurance company is likely to attract customers like Clancy who want to purchase insurance because he knows better than the company that he is more likely to make a claim on a policy.What is the term used to describe the situation above?

Accepted Answer

A) moral hazard 
B) adverse selection 
C) asymmetric information 
D) economic irrationality 
A) moral hazard 
B) adverse selection 
C) asymmetric information 
D) economic irrationality

Question 17

Automobile insurance companies have a problem with people who buy insurance and then drive recklessly or take less care to avoid losses after being insured.In other words,the automobile insurance market is subject to

Accepted Answer

A) asymmetric information. 
B) market signaling. 
C) moral hazard. 
D) adverse selection. 
A) asymmetric information. 
B) market signaling. 
C) moral hazard. 
D) adverse selection.

Question 18

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

Accepted Answer

A) rising;rising 
B) rising;falling 
C) falling;rising 
D) falling;falling 
A) rising;rising 
B) rising;falling 
C) falling;rising 
D) falling;falling

Question 19

Based on the current rate of growth,health care spending as a percentage of GDP through Medicare,Medicaid,and other U.S.government programs is expected to

Accepted Answer

A) stabilize within the next 20 years. 
B) account for a majority of spending as a percentage of GDP within 5 years. 
C) slow down during this decade. 
D) more than double over the next 40 years. 
A) stabilize within the next 20 years. 
B) account for a majority of spending as a percentage of GDP within 5 years. 
C) slow down during this decade. 
D) more than double over the next 40 years.

Question 20

In most circumstances,employees do not pay taxes on the value of health insurance their employers provide them.

Accepted Answer

A) True 
 B)False

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

The cost of group health insurance is lower than if an individual buys a policy on his own because

The Congressional Budget Office estimates that the Patient Protection and Affordable Care Act (PPACA)will

Of the following,which has most likely contributed the most to the rapid rise in health care costs in the United States?

Health insurance companies impose deductibles on policies and co-payments on claims to reduce the problem of adverse selection.

The largest government-run health care system in the world,with 1.7 million employees,is in

Briefly explain 4 of the difficulties in making cross-country comparisons in health care outcomes.

If a doctor knows that an insurance company will pay for most of a patient's bill,the doctor has more of an incentive to require additional medical procedures and tests,even if the patient may not require them.This is an example of

When people who buy insurance change their behavior after the purchase because they are protected from loss by the insurance,the insurance market is said to face the problem of

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

Health insurance plans which typically reimburse doctors mainly by paying a flat fee per patient are known as

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

An insurance company is likely to attract customers like Clancy who want to purchase insurance because he knows better than the company that he is more likely to make a claim on a policy.What is the term used to describe the situation above?

Automobile insurance companies have a problem with people who buy insurance and then drive recklessly or take less care to avoid losses after being insured.In other words,the automobile insurance market is subject to

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

Based on the current rate of growth,health care spending as a percentage of GDP through Medicare,Medicaid,and other U.S.government programs is expected to

In most circumstances,employees do not pay taxes on the value of health insurance their employers provide them.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Exam 5: The Economics of Health Care

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

The cost of group health insurance is lower than if an individual buys a policy on his own because

The Congressional Budget Office estimates that the Patient Protection and Affordable Care Act (PPACA)will

Of the following,which has most likely contributed the most to the rapid rise in health care costs in the United States?

Health insurance companies impose deductibles on policies and co-payments on claims to reduce the problem of adverse selection.

The largest government-run health care system in the world,with 1.7 million employees,is in

Briefly explain 4 of the difficulties in making cross-country comparisons in health care outcomes.

If a doctor knows that an insurance company will pay for most of a patient's bill,the doctor has more of an incentive to require additional medical procedures and tests,even if the patient may not require them.This is an example of

When people who buy insurance change their behavior after the purchase because they are protected from loss by the insurance,the insurance market is said to face the problem of

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

Health insurance plans which typically reimburse doctors mainly by paying a flat fee per patient are known as

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

An insurance company is likely to attract customers like Clancy who want to purchase insurance because he knows better than the company that he is more likely to make a claim on a policy.What is the term used to describe the situation above?

Automobile insurance companies have a problem with people who buy insurance and then drive recklessly or take less care to avoid losses after being insured.In other words,the automobile insurance market is subject to

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

Based on the current rate of growth,health care spending as a percentage of GDP through Medicare,Medicaid,and other U.S.government programs is expected to

In most circumstances,employees do not pay taxes on the value of health insurance their employers provide them.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

Firms, the Stock Market, and Corporate Governance

Consumer Choice and Elasticity

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

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