Question 1

Consumer cooperatives have a long and successful history in development of the HMO.
True
False
1 points

Question 2

The necessary catalyst for development of social insurance programs for health care was the:
a.
Rise of the middle class in the Industrial Age
b.
Invention of HMOs in the Information Age
c.
Increased disparity in life expectancy between income classes
d.
Introduction of antibiotics
e.
The evolution of statistical methods in health care analysis.
1 points
Question 3

The Law of Large Numbers explains why it is unlikely that the actuarially fair premium for an insurance policy will be the same for a small start up firm as it will be for a large employer such as a university.
True
False
1 points
Question 4

A U.S. emergency relief agency is considering sending a team of highly paid experts to treat a severely contagious disease outbreak to another country. The agency estimates effectiveness as follows:
Number of Team Members
Number of Deaths
0
1,000
5
350
10
200
15
30
20
30
Diminishing marginal returns sets in with:

the 5th team member.

the 10th team member.

the 15th team member.

the 20th team member.

does not occur.
1 points
Question 5

A sudden escalation in medical costs for treatment of ischemic heart disease would immediately:
a.
Benefit providers
b.
Be passed on to consumers
c.
Benefit insurance companies
d.
Decrease insurance company profits in the short term
e.
Decrease tax revenues to the federal government
1 points
Question 6

A key to establishing medical homes is effective information and care management.
True
False
1 points
Question 7

In the U.S., the key determinants of population growth have been the excess of increasing birth rate and declining death rates.
True
False
1 points
Question 8

For-profit firms make up the bulk of hospital organizations.
True
False
1 points
Question 9

Not-for-profit hospitals differ from traditional corporations in that:
a.
A hospital may raise money for a capital building project from charitable social events
b.
A hospital may raise money from charitable organizations to fund everyday operating shortfalls
c.
A hospital may have a large endowment from previous benefactors
d.
A hospital is expected to provide a small, but significant portion of its services to patients who are unwilling or unable to pay for them
e.
All of the above
1 points
Question 10

A problem with Cost-Benefit Analysis is

scientists observe people’s behavior to calculate how much individuals are willing to pay for a particular treatment.

opportunity cost is measured as the value of the next best alternative foregone.

the perspective of the one benefitting from the medical service must be included.

sometimes subtle distinctions in the alternatives considered as opportunity costs may overstate the benefits of a treatment.

the use of expected values employs the statistics law of large numbers and this is not acceptable for individual decision making analysis.
1 points
Question 11

Health economists view all incentives as monetary in tracing the money trail in a medical decision.
True
False
1 points
Question 12

Cost-benefit analysis of a childhood immunization program is straight-forward analysis because the costs of the drugs are well known and the benefits to individual children are easy to calculate.
True
False
1 points
Question 13

Bill’s health insurance covers preventive and cosmetic dental services, including orthodontic care, for employees and their family members. Bill is willing to pay $30 per month for over the counter teeth whitening strips at the local pharmacy. With his co-pay, he learns he can pay $25 per month and receive professional teeth whitening services at his dentist. He chooses to go to the dentist for the service, which costs the insurance company $75 per month. This is an example of adverse selection.
True
False
1 points
Question 14

Sahar’s demand curve for chiropractic visits is characterized by Q = 10 – 0.2P. The following table shows her demand for services:
Price per Visit
Number of Visits
0
10
10
8
20
6
30
4
40
2
50
0
Sahar responds only to her out-of-pocket payment when deciding how many office visits to make. Assume Sahar obtains insurance coverage which requires her to pay 20% of the price per visit. At a price of $50, how many office visits will Sahar make?
a.
10
b.
8
c.
6
d.
4
e.
0
1 points
Question 15

Shareholders of the Allegheny General Hospital group violated the shareholder/investor agency relationship when illegal accounting practices were discovered in the late 1990s.
True
False
1 points
Question 16

Economists treat the increase in health expenditures in the U.S. as solely a trade off between costs of medical interventions and gains in life expectancy and costs for those interventions.
True
False
1 points
Question 17

Catastrophic medical expenses are large, infrequent and unpredictable. Risk aversion explains why people buy insurance which covers such catastrophic events.
True
False
1 points
Question 18

Rising costs and declining consumer satisfaction are the keys to defining the system as broken.
True
False
1 points
Question 19

When Allegheny Hospital System (AHERF) went bankrupt, the price of borrowing for all hospitals increased. This is an example of correlated system risk.
True
False
1 points
Question 20

According to Dr. Getzen’s text:
a.
The physician group, the hospital group, and the insurance groups are all for-profit subsidiaries of Kaiser Permanente
b.
The physician group, the hospital group, and the insurance groups are all not-for -profit subsidiaries of Kaiser Permanente
c.
The physician group is a partnership; the hospital and insurance groups are not-for-profit entities
d.
Kaiser Permanente has the greatest percentage share of HMO members in the U.S.
e.
Kaiser Permanente is strongest in smaller urban areas
1 points
Question 21

Issues in agency would be least likely to arise in:
a.
Sole proprietorships
b.
Partnerships with less than 3 partners
c.
Partnerships with 3 or more partners
d.
For-profit corporations
e.
Not-for-profit corporations
1 points
Question 22

Depending on assistance from family and friends to pay for one’s unforeseen medical expenses is an example of an economic trade-off between consumption today and consumption tomorrow.
True
False
1 points
Question 23

The Stone Age is characterized by equality of income, low medical expenditures and population growth rates which doubled every 10,000 years.
True
False
1 points
Question 24

The U.S. is unusual in the developed world in that it uses a general tax to fund health insurance for the elderly.
True
False
1 points
Question 25

One of the key contributions health economists make to any debate on medical care decisions is to force the questions which make clear the perspectives of each party involved: patient, provider, or payer.
True
False
1 points
Question 26

Cost-effectiveness analysis is a limiting case of the general cost-benefit analysis.
True
False
1 points
Question 27

Hospitals using working capital cash accounts to make up for the difference in timing between accounts receivable and expenses paid.
True
False
1 points
Question 28

The role of the physician in the 21st century compared with her role in the early and mid 20th century will be a switch from expert and sole decision maker to that of team leader.
True
False
1 points
Question 29

Sahar’s demand curve for chiropractic visits is characterized by Q = 10 – 0.2P. The following table shows her demand for services:
Price per Visit
Number of Visits
0
10
10
8
20
6
30
4
40
2
50
0
With insurance, at the $50 office visit price, how many of the services Sahar demands are worth less than to her than what they cost?
a.
10
b.
8
c.
6
d.
4
e.
0
1 points
Question 30

The Agricultural Age is characterized by great income inequality and explosive population growth.
True
False
1 points
Question 31

A cost effectiveness study evaluates whether or not the benefits from inserting a drug eluting coronary stent add enough years of life expectancy to justify the cost; a cost-benefit study evaluates whether a drug eluting coronary stent, a beta blocker drug or cardiac bypass surgery might provide the most additional years of life expectancy per dollar spent.
True
False
1 points
Question 32

Bill’s employer offers a new health insurance benefit which covers preventive and cosmetic dental services, including orthodontic care, for employees and their family members. If Bill knows his children need extensive orthodontic care, he will buy the policy. This is an example of moral hazard.
True
False
1 points
Question 33

Kaiser Health Plan is the only HMO in the U.S. to consistently maintain its core competencies. That is, it has kept client satisfaction high, while keeping the growth rate of premiums higher than the growth rate of medical costs.
True
False
1 points
Question 34

Societal structure during the Agricultural Age provided localized areas which were susceptible to catastrophic losses of life from drought, pestilence and disease.
True
False
1 points
Question 35

Varying measures of benefits can result because the viewpoint of the party benefitting from a treatment varies.
True
False
1 points
Question 36

According to the text, medical care expenditures increased from the Agricultural Age to the Industrial Age. At the end of the Agricultural Age, almost all expenditures on health care were driven by the 2% of the population that was wealthy. Greater equality of income and wealth distribution in the Industrial Age helped support the increase in medical expenditures.
True
False
1 points
Question 37

The U.S. government subsidizes the private provision of health insurance through employers. Benefits paid to employees are deductible as expenses by firms but not recognized as taxable income by employees. Consider two employees, Ann and Bob, who both receive $12,000 in insurance benefits for their family. Ann earns $30,000 and pays 15% in taxes. Bob earns $75,000 and pays 25% in taxes. The tax subsidy to Bob is:
a.
The same as the tax subsidy to Ann
b.
Twice as large as the tax subsidy to Ann
c.
Half as much as the tax subsidy to Ann
d.
$1,200 more than the subsidy to Ann
e.
$1,000 more than the subsidy to Ann
1 points
Question 38

Social insurance:
a.
Is useful for covering expenses related to common allergy treatments
b.
Is not found in the U.S.
c.
Would most likely provide more extensive coverage for dementia treatments than family or private savings
d.
Should cover preventive dental cleaning in adults
e.
Was first implemented in the U.K. after World War II
1 points
Question 39

Economics is the science which studies how scarce resources are allocated among unlimited needs and wants. In health economics, allocation can be restated as distribution resources, the distribution of health, the distribution of medical care, and the distribution of provider incomes.
True
False
1 points
Question 40

Offering insurance coverage through an optional rider would likely cause the most problems with adverse selection for which condition?
a.
Prenatal care for pregnant women
b.
Stress reduction counseling for employees
c.
HIV/AIDs treatment
d.
Preventive dental examinations
e.
Policy covering accidents for children in daycare