Health Policy and Management Test
Preparation
Course Introduction
Health Policy and Management explores the development, implementation, and evaluation of health policies as well as the organization, leadership, and administration of health care systems. The course examines the economic, political, and ethical factors that influence decision-making in health care, emphasizing the interplay between public agencies, private organizations, and community stakeholders. Students study health system structures, policy processes, and contemporary issues such as health equity, access to care, and quality improvement, equipping them with analytical skills and management strategies necessary for effective leadership in the health sector.
Recommended Textbook Health Care Economics 7th Edition by
Paul J. Feldstein
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18 Chapters
357 Verified Questions
357 Flashcards
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Page 2
Chapter 1: An Introduction to the Economics of Medical Care
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20 Verified Questions
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Sample Questions
Q1) In a competitive market,firms will continue to produce until marginal cost is equal to A)Price
B)Marginal revenue
C)Both a and b
D)Neither a and b
Answer: C
Q2) In the graph above,which point is not attainable?
A)Point A
B)Point B
C)Point C
D)Point D
Answer: C
Q3) Demand curves are downward sloping because of
A)Increasing marginal cost
B)Diminishing marginal cost
C)Increasing marginal benefit
D)Diminishing marginal benefit
Answer: D
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Chapter 2: The Role of Government in Health and Medical Care
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Sample Questions
Q1) The demand curve for flu shots is P = 100 - 2Q,and the supply curve for flu shots is P = 19 + Q where Q is a million shots per year and P is the dollars per shot.Assume that the flu shots generate an additional benefit in that it reduces the likelihood of others getting sick.This benefit is valued at $6 per shot per year.The private market equilibrium quantity of shots produced is ____________________________,but the socially optimal amount of shots is ________________________________.
A)27 million shots;25 million shots.
B)27 million shots;24 million shots.
C)27 million shots;29 million shots.
D)25 million shots;29 million shots.
Answer: C
Q2) Externalities occurred due to
A)A lack of property rights
B)A lack of government oversight
C)Poor choices made by firms
D)Poor choices made by consumers
Answer: A
Q3) Graph the Marginal Private Cost (MPC)and the Marginal Private Benefit. Answer: 11ea48be_8914_81ef_b057_a5da371a5ee7_TB2105_00
Page 4
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Chapter 3: Health Policy and the Legislative Marketplace
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Sample Questions
Q1) Explain why the AMA supports a requirement of employer sponsored health insurance,but not a public health insurance option?
Answer: A large public health insurance company can impose monopsony power and force medical providers to accept lower prices for services than those that can be negotiated with smaller private firms.
Q2) The AMA would support an
A)Expansion in the number of nurses
B)Expansion in the types of procedures a nurse can perform
C)Both a and b
D)Neither a nor b
Answer: A
Q3) Which of the following organizations would not support a bill expanding the supply of nurses to hospitals?
A)AMA
B)ANA
C)AHA
D)AAMC
Answer: B
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Chapter 4: The Production of Health: the Impact of Medical
Services on Health
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Sample Questions
Q1) In the Rand Health Insurance Experiment,which group had a statistically better improvement in health?
A)Full coverage group
B)50% coverage group
C)25% coverage group
D)There was no difference between groups.
Q2) The number one cause of death in 2007 is
A)Accidents
B)Diabetes
C)Heart disease
D)Cancer
Q3) A hospital is considering hiring either a physician anesthetist or a nurse anesthetist.The cost of a physician anesthetist is $200,000,but their marginal product is 50 procedures per day.The cost of a nurse anesthetist is $100,000,but their marginal product is 30 procedures per day.Who do you hire and why?
Q4) Compare cost-utility analysis to cost-effective analysis.
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Chapter 5: An Overview of the Medical Care Sector
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Sample Questions
Q1) As the average age in the population increases,the demand for hospitals will __________ and the demand for nursing homes will ___________ .
A)Increase;increase
B)Increase;decrease
C)Decrease;decrease
D)Decrease;increase
Q2) Suppose the state legislature passes a state mandate on mammography exams.Which of the following will occur?
A)The price of mammography exams will increase.
B)The wages of registered radiologic technologists will increase.
C)Both a and b.
D)Neither a nor b.
Q3) In an effort to control the size of hospitals,the government imposes a legal limit on the number of hospital beds that may be active.This policy will cause some hospitals to reduce the number of beds available.Explain how this policy change affects the three markets in the medical sector.
Q4) Explain the role of health insurance to expand access to care.Pay particular attention to the effect of health insurance on the elasticity of demand.
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Page 7
Chapter 6: The Demand for Medical Care
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Sample Questions
Q1) After the introduction of Medicare and Medicaid,the increase in medical expenditures can be explained by a
A)Less than 25% increase in prices
B)25% to 50% increase in prices
C)50% to 75% increase in prices
D)Greater than 75% increase in prices
Q2) According to Robert Fogel,the benefits of health care have
A)Exceeded cost
B)Are equal to cost
C)Not kept up with cost
D)There is no relationship between cost and benefits
Q3) As co-insurance rates increase,patients become
A)More sensitive to changes in price,which leads to over-consumption
B)Less sensitive to changes in price,which leads to over-consumption
C)More sensitive to changes in price,which leads to under-consumption
D)Less sensitive to changes in price,which leads to under-consumption
Q4) Discuss the results of the RAND Health Insurance Experiment.Specifically,did the generosity of the health insurance plan affect the level of medical care use? Did the generosity of the health insurance plan affect overall health,on average?
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Chapter 7: The Demand for Health Insurance
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Sample Questions
Q1) Which of the following policies limits the extent of moral hazard in the health insurance market?
A)Stop loss
B)Large deductibles
C)Varying co-insurance rates
D)All of the above
E)None of the above
Q2) As it applies to health insurance,the adverse selection problem is the tendency for:
A)Those most likely to collect on insurance,i.e.,sick people,to buy it.
B)Those who buy insurance to take less precaution in avoiding illness.
C)Sellers to price-discriminate.
D)Sellers to restrict output and charge high prices.
Q3) Suppose there are two types of people in an insurance market: high and low risks.The high-risk person is sick 10% of the time and the low-risk person is sick 5% of the time.The probability of any individual being high risk is 40%.Upon getting sick,an individual loses $10,000 in medical expenses.What if the individuals do not know their type?
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Chapter 8: The Supply of Medical Care: an Overview
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Sample Questions
Q1) If a hospital is experiencing economies of scale,
A)Its average cost curve is positively sloped as output increases.
B)Its average cost curve is negatively sloped as output increases.
C)It should reduce its output level to lower costs.
D)Quality is falling as output is rising.
E)Both b and c are true.
Q2) If the demand for hospital visits in a city are 10,000 and a typical physician office can accommodate 50 patients per day,the number of physician offices is
A)2000
B)200
C)20
D)Cannot be determined
Q3) The cost of a national health insurance program would be____ and the availability of services _______ when supply is more ________.
A)Greater;diminished;inelastic
B)Less;diminished;inelastic
C)Greater;diminished;elastic
D)Less;enhanced;inelastic
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Chapter 9: Market Competition in Medical Care
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Sample Questions
Q1) Which of the following is not true about health insurance?
A)Has driven up the cost of health care.
B)Creates a moral hazard problem for many people.
C)Makes demand for health care more elastic.
D)Is a means of dealing with the uncertainty that surrounds health care.
Q2) Insurance plans that seek to reduce the moral hazard problem include
A)HMOs
B)Low co-insurance rate plan
C)Both a and b
D)Neither a nor b
Q3) Tax exemption of health insurance leads to _________ market distortion._________ health insurance choices leads to _________ market distortion.
A)More;More;more
B)More;More;less
C)Less;Less;less
D)More;More;more.
E)None of the above
Q4) Explain how the new payment system for hospitals instituted by the National Health Services of Britain affected hospital stay length,expenditures,and mortality.
11
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Chapter
Performance and Structure
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Sample Questions
Q1) 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)$300
B)$250
C)$150
D)$50
Q2) Firms self-insure to
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.
Q3) Blue Cross and Blue Shield uses
A)Experience rating premiums
B)Community rating premiums
C)Uniform rating premiums
Q4) 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?
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Chapter 11: The Physician Services Market
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Sample Questions
Q1) On average,the training costs (both money and time)for a physician are felt to explain
A)Virtually not at all the high income of physicians
B)Partially the high income of physicians
C)Completely the high income of physicians
Q2) The observation that an increase in the supply of physicians to an area is matched by an increase in the price of physicians' services (rather than a price decrease)can be explained via the supplier-induced demand hypothesis.Which of the following is also a plausible explanation for this observation?
A)An increase in the supply of physicians reduces time and travel costs to consumers,causing demand to increase
B)An increase in the supply of physicians increases consumers' perceptions of the quality of health care available,causing demand to increase
C)An increase in the supply of physicians may correspond to a contemporaneous increase in demand for reasons such as an aging population or rising consumer incomes
D)All of the above
Q3) Explain the effects of advertising on physician services.
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Chapter 12: The Market for Hospital Services
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Q1) The quality of hospitals used by HMOs is on average
A)Greater than non-HMO hospitals
B)Equal to non-HMO hospitals
C)Less than non-HMO hospitals
Q2) If hospital transaction costs are high,then
A)A hospital is more likely to be vertically integrated
B)A hospital is more likely to use an integrated delivery systems
C)Both a and b
D)Neither a nor b
Q3) Over the last 25 years,the number of for-profit hospitals has
A)Exceeded the number of nonprofit hospitals
B)Has declined relative to nonprofit hospitals
C)Has increased by more than 50%
D)Has increased by less than 50%
Q4) Which of the following models of hospital ownership is most likely to over invest in hospital capacity?
A)For-profit hospital
B)Physician-controlled hospital
C)Utility-maximizing hospital
Q5) Explain how Certificates of Need (CON)may be anticompetitive.
Page 14
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Chapter 13: The Pharmaceutical Industry
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Sample Questions
Q1) Drug after formularies
A)Help manufacturers determine which drugs are efficacious
B)Help salesmen determine what to sell
C)Determine which drugs will be covered by third-party payers
D)Both b and c
Q2) If the demand for Lipitor is P = 1000 - 10Q (MR = 1000 -20Q)in the United States and P = 500 -20Q (MR = 500 - 40Q)in Canada,at what price would Lipitor sell at in each country? Assume marginal cost is equal to $100.
Q3) Explain what would happen to the price of drugs,both domestic and abroad,if the United States allowed the reimportation of drugs.
Q4) For pharmaceutical drugs,R&D expenditures account for
A)Over two-thirds of expenses
B)Between one-third and two-thirds of total expenses
C)Less than one-third of expenses
Q5) Suppose there is a new drug in the pipeline that will reduce infant mortality in half from .05 to .025,but the drug will not be approved by the FDA for 3 years.If 10,000 children are afflicted each year,what is the number of statistical deaths that could have been avoided with earlier FDA approval?
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Chapter 14: Health Manpower Shortages and Surpluses:
Definitions, measurement, and Policies
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Sample Questions
Q1) Which of the following is a normative statement?
A)Nonprofit hospitals are inefficient
B)Physicians should be more cost conscious
C)Government-sponsored health insurance will provide lower premiums
D)All of the above
Q2) Which of the following will occur if labor demand and supply simultaneously increase?
A)An increase in equilibrium wages and ambiguous change in the equilibrium quantity of labor
B)An ambiguous change in equilibrium wages and equilibrium quantity of labor
C)An ambiguous change in equilibrium wages and an increase in the equilibrium quantity of labor
D)A decrease in equilibrium wages and an increase in the equilibrium quantity of labor
Q3) Friedman and Kuznets found that physicians earn
A)32% less than dentists
B)About the same as dentists
C)32% more than dentists
Q4) What are the potential pitfalls of using the ratio technique to determine shortages/surpluses?
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Chapter 15: The Market for Physician Manpower
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Q1) Fee-splitting occurs when
A)A specialist splits their charge with the hospital that gives them privileges
B)A specialist splits their charge with the referring physician
C)A physician splits their charge with an assisting nurse
D)A physician splits their charge with the patient's insurance company
Q2) Describe how physicians can use price-discrimination to serve both high- and low-income patients.
Q3) The American Medical Association helped to erect barriers to entry into the profession to
A)Protect patients from poor-quality physicians
B)Prevent the overproduction of physicians
C)Increase physician rents under the guise of patient protection
D)All of the above
Q4) How is advertising similar to physician inducement?
A)Both activities can generate increased revenue
B)Both activities increase costs
C)Both activities provide no social value
D)Both a and b
Q5) Describe how barriers to entry would decrease the quality of care.
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Chapter 16: The Market for Medical Education: Equity and Efficiency
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Q1) Large government subsidies allow medical schools to set tuition
A)Higher than the competitive price
B)Lower than the competitive price but above cost
C)Lower than the competitive price and below cost
D)None of the above
Q2) Income Contingent Loan Repayment Plans (ICLRP)have been proposed to encourage medical school graduates to
A)Locate to a rural area
B)Work with underserved populations
C)Locate to an urban area
D)None of the above
Q3) What would be an economic justification for subsidizing a medical education?
Q4) What are some of the concerns associated with medical school tuition that reflect the true cost of a medical education?
Q5) The use of fluorine in public tap water to reduce cavities is an example of a
A)Negative externality
B)Positive externality
C)Public good
D)Private good
Q6) How do we determine economic efficiency in the supply of medical schools? Page 18
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Page 19
Chapter 17: The Market for Registered Nurses
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Q1) Which of the following items has the smallest effect on the wage differential between men and women?
A)Years of experience
B)Years of tenure
C)Sex discrimination
D)Each of the above have the same effect on the wage differential
Q2) Dynamic shortages and static shortages occur in
A)The short-run
B)The long-run
C)Both a and b
D)Neither a nor b
Q3) According to Gruber and Kleiner,in-hospital mortality due to a nurses' strike
A)Increased by 19%
B)Decreased by 19%
C)Increased by 6.5%
D)Decreased by 6.5%
Q4) Explain why prior to 1966,the nursing market was experiencing a static shortage.
Q5) Explain how the introduction of Medicare resolved the issues of "static shortages" in nursing.
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Chapter 18: National Health Insurance: an Approach to the
Redistribution of Medical Care
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Q1) Infant mortality is higher in Canada than in the United States
A)True
B)False
Q2) Explain how a comparative effectiveness board could reduce health care cost.
Q3) Medicaid is financed using a
A)Progressive tax
B)Regressive tax
C)Flat tax
D)None of the above
Q4) Hospital services are covered by
A)Medicare Part A
B)Medicare Part B
C)Medicare Part C
D)Medicare Part D
Q5) What are the benefits and costs of an individual health insurance mandate.
Q6) According to Long and Stockley,what are the benefits and cost of the Massachusetts Health Plan?
Q7) Life expectancy is higher in Canada than in the United States.
A)True
B)False Page 21
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Page 22