Health Systems Organization
Exam Answer Key
Course Introduction
Health Systems Organization explores the structure, function, and dynamics of health systems at local, national, and global levels. The course examines key components including healthcare delivery, financing, governance, and policy-making, as well as the roles of various stakeholders such as governments, private sectors, and non-governmental organizations. Students will analyze how health systems are organized to address population health needs, manage resources, and ensure equitable access to care, while also considering the impact of social, economic, and political factors on health system performance and reform.
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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Sample Questions
Q1) In the graph above,point A is
A)Attainable
B)Efficient
C)Both attainable and efficient
D)Neither attainable nor efficient
Answer: C
Q2) Suppose the federal government will no longer provide financial support to hospitals (causing some public hospitals to close),but will instead give that money directly to taxpayers in the form of a tax credit on medical expenditures.What will happen to the equilibrium price and the quantity of physician office visits?
A)Price uncertain;quantity will increase
B)Price uncertain;quantity will decrease
C)Price will increase;quantity uncertain
D)Price will decrease;quantity uncertain
Answer: C
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Chapter 2: The Role of Government in Health and Medical Care
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Sample Questions
Q1) Which of the following is not an "in kind" transfer?
A)$10 itunes gift card
B)$100 medical care tax credit
C)$100 in cash
D)All of the above
Answer: C
Q2) The arguments against price competition in the medical care market is
A)Lack of responsiveness to patient demand
B)Lack of medical innovation
C)Lack of sufficient consumer protection
D)Lack of efficiency
Answer: C
Q3) Find the equilibrium price and quantity in the private market.
Answer: We solve for the equilibrium price and quantity by finding where the MPC line intersects the MPB line.
MPB = MPC
1000-4Q=200
800=4Q
Q=200
P=MPB=1000-4(200)=1000-800=200
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Chapter 3: Health Policy and the Legislative Marketplace
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Sample Questions
Q1) Discuss the three methods medical associations use to reduce competition.Give an example for each.
Answer: The text references three types of methods used by medical associations to limit competition.The first is to make the activity illegal.The ADA has been successful in preventing denturism.The next activity is to exclude the substitute services from payment by any third party.The AHA tries to reduce entry by limiting the types of hospitals that can receive Blue Cross funds.The third approach is to try to raise the costs of the substitutes who must then raise their own prices if they are to remain in business.The AHA supports the use of certificate-of-need to increase the cost associated with entry.
Q2) Fill in the blank: A __________ is a tax where the tax rate _______ with wealth.
A)Regressive tax;increases
B)Regressive tax;decreases
C)Regressive tax;remains unchanged
D)None of the above
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 Thorton study of mortality and Medical expenditures,which of the following had the smallest effect on mortality?
A)Smoking
B)Education
C)Crime in the city
D)Medical expenditures
Q2) The number one cause of death in 2007 is
A)Accidents
B)Diabetes
C)Heart disease
D)Cancer
Q3) To allocate resources efficiently,one should consider
A)The relative size of each program
B)The marginal product of each program
C)The average product of each program
D)The level of need in each program
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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Q1) If the supply function in the medical sector is relatively elastic,then a rightward shift in demand will cause
A)Price to increase faster than quantity increases
B)Price to decrease faster than quantity increases
C)Price to increase slower than quantity increases
D)Price to decrease slower than quantity increases
Q2) A decrease in the demand for physical therapy will lead to
A)A decrease in the wages of physical therapists
B)A decrease in the number of physical therapist students
C)A decrease in the price for physical therapy
D)All of the above
E)None of the above
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) What are the prices and quantities in each of the three markets of the medical sector?
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Chapter 6: The Demand for Medical Care
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Sample Questions
Q1) 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
Q2) Empirical studies of demand for health care have often failed to account for
A)The cost of time
B)The availability of substitutes or complements
C)Utilization of medical services
D)All of the above
Q3) For individuals in the United States.
A)The income elasticity of demand for medical services is less than 1.0 in absolute value
B)The price elasticity of demand for hospital and physician visits is greater than 0.5 in absolute value
C)Both a and b
D)Neither a nor b
Q4) Discuss the role of physicians on patients' demand for medical services.
Q5) Discuss the role of "time cost" on the demand for medical services.
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Chapter 7: The Demand for Health Insurance
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Sample Questions
Q1) 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 that any individual is high risk is 40%.Upon getting sick,an individual loses $10,000 in medical expenses.What are the actuarially fair premiums for the types?
Q2) Lucy Ramirez has $22,500 in income.After a recent trip to Cuba,she discovers that there is a 25% chance of acquiring Cubanitis.The disease is 100% curable but requires the Fidelonomy procedure (at a cost of $12,500).The Kuba-Kuba Insurance Company offers a policy that will cover the Fidelonomy.The premium they charge is $4,000.Of this premium,the pure premium is __________ and the loading fee is _______.
A)$4,000;$0
B)$3,125;$875
C)$875;$3125
D)Not enough information to answer.
Q3) When an insurer promises to pay 30% of treatment costs,this amount is known as a
A)Deductible
B)Co-insurance
C)Stop-loss
D)Lifetime maximum
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9
Chapter 8: The Supply of Medical Care: an Overview
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Q1) One of the benefits of a national health insurance program is that it guarantees a large insurance pool.Why is this a benefit? What economic principle is being addressed here?
Q2) Monopolistic competition is described as.
A)Many identical firms and intense price competition
B)Many differentiated firms and soft price competition
C)Many differentiated firms and intense price competition
D)Few identical firms and soft price competition
Q3) If a hospital displays decreasing average costs on output,should the hospital be regulated even though it is more efficient?
Q4) Hospitals compete mainly in a _________ market.
A)Product market
B)Quality market
C)Geographic market
D)Price market
Q5) Assume that the marginal productivity of an RN is 10 patients and the marginal productivity of an LPN is 2.5 patients.The wage of an LPN is $20 per hour.Find the equilibrium wage for RNs.
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Chapter 9: Market Competition in Medical Care
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Sample Questions
Q1) What does the Rand HMO experiment tell us about the effect of HMOs on hospitalized utilization?
Q2) Certificate of Need
A)Forced hospitals to gain government approval before commencing capital improvements
B)Caused medical care expenditures to increase
C)Both a and b
D)Neither a nor b
Q3) Which reimbursement mechanisms encourage over-servicing by doctors?
A)Fee For Service
B)Capitation
C)Neither a nor b
D)Both a and b
Q4) Which of the following reduce price competition?
A)Hospital consolidation
B)Price regulation
C)State regulation
D)None of the above
E)All of the above
Q5) Describe the advantages and disadvantages of capitation payments.
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Chapter 10: The Market for Health Insurance: Its
Performance and Structure
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Sample Questions
Q1) Explain why insurance companies may be hesitant to increase relative premiums.
Q2) If the health insurance premium is equal to $2,000 and administrative fees are $500,then what is the benefit/premium ratio?
A).25
B).50
C).75
D)Cannot be calculated with the above information
Q3) Do high concentration ratios have an effect on input prices?
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?
Q5) Commercial insurers who use a(n)_____________ rating can steal ________ risk individuals from Blue Cross and Blue Shield and reduce cost.
A)Community;high
B)Community;low
C)Experience;high
D)Experience;low
Q6) Explain why the use of community-rated premiums leads to economic inefficiencies.
Page 12
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Chapter 11: The Physician Services Market
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Sample Questions
Q1) The frequency of malpractice claims against physicians
A)Is higher for general practitioners than any other specialty
B)Has increased dramatically since the mid-1980s for all specialties
C)Differs little among specialties
D)Is greater for those specialties that practice high-risk invasive procedures
E)Will continue to soar unless tort laws are reformed
Q2) A specific opportunity cost of attending medical school is:
A)The tuition fee
B)The foregone income
C)The sleep deprivation and fatigue during arduous internships
D)All of the above
Q3) 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
Q4) Explain the effects of advertising on physician services.
Q5) What is supplier-induced demand and explain its affects on medical prices and services?
Q6) How did physicians accepting Medicare assignments cause price discrimination?
Page 13
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Chapter 12: The Market for Hospital Services
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Q1) The predominate organizational form for U.S.hospitals is not-for-profit.Why?
A)The profit motive corrupts human behavior
B)For-profit hospitals do not provide charity care
C)Private not-for-profit hospitals engage in most of the medical research
D)The not-for-profit form provides the most benefits to physicians
E)All of the above
Q2) Explain how Certificates of Need (CON)may be anticompetitive.
Q3) What are the advantages of using the Herfindahl-Hirschman Index versus a concentration ratio?
Q4) The main reason for the dramatic increase in the real cost of a hospital patient bed day over the past 50 years is
A)Increased price of medical equipment
B)Increased quantity of medical equipment
C)Increased wages and salaries
D)Increased use of labor
Q5) 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%
Page 14
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Chapter 13: The Pharmaceutical Industry
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Sample Questions
Q1) Which policy simplified and streamlined the process for FDA approval of generic drugs in exchange for granting patent extensions to innovative drugs?
A)Hatch-Waxman Act
B)1962 Drug Amendment
C)Medicare Modernization Act
D)None of the above
Q2) 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?
Q3) Research and development (R&D)is considered a _____ because _____:
A)Variable cost;more R&D leads to more quantity produced
B)Variable cost;more R&D leads to higher profits
C)Fixed cost;it does not vary with current output
D)Fixed cost;it is related to advertising
Q4) Most pharmaceutical drug discoveries fail to lead to a marketable drug due to
A)Abandonment before reaching Phase III trials
B)Abandonment due to failure during Phase III trials
C)Abandonment for economic reasons despite success during Phase III trials
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Chapter 14: Health Manpower Shortages and Surpluses:
Definitions, measurement, and Policies
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Sample Questions
Q1) Suppose Medicare no longer subsidizes residency programs.Instead,the residents must pay for the education.Who will pay more,general practitioners or specialists?
Q2) Assume the government imposes price controls on physician wages where the wage cannot exceed $120.Let the demand for labor be w = 500 - Q and the supply of labor is w = 3Q.
A)Wage is $375 and quantity is 125
B)Wage is $375 and quantity is 40
C)Wage is $120 and quantity is 380
D)Wage is $120 and quantity is 40
Q3) What are the potential pitfalls of using the ratio technique to determine shortages/surpluses?
Q4) Regulators and advocates argue that licensure is appropriate because it:
A)Ensures that patients get high-quality care
B)Increases remuneration to those with the licenses
C)Reduces the incidence of deficient care
D)Both a and c
Q5) Suppose the federal government would like to protect health professional jobs by only allowing U.S.citizens to hold positions in hospitals,regardless of where they trained.Is this a good policy? Why or why not?
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Chapter 15: The Market for Physician Manpower
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Q1) In his classic article entitled "Price Discrimination in Medicine," Kessel claimed that control over physicians' pricing behavior was related to
A)Hospital privileges
B)Membership into medical societies
C)Protection of low-income patients
D)Both a and b
E)Both a and c
Q2) What are the advantages of using reexamination instead of additional hours of continual education to recertify physicians?
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) Describe how physicians can use price-discrimination to serve both high- and low-income patients.
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) How do we determine economic efficiency in the supply of medical schools?
Q2) On average,medical school subsidies benefit people from
A)Higher-income families most
B)Middle-income families most
C)Lower-income families most
Q3) 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
Q4) Currently,there is an
A)Excess supply of medical schools as indicated by the low price
B)Excess demand for medical education as indicated by the excess number of applications to medical school
C)Both a and b
D)Neither a nor b
Q5) What are some of the concerns associated with medical school tuition that reflect the true cost of a medical education?
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Q6) What would be an economic justification for subsidizing a medical education?
Chapter 17: The Market for Registered Nurses
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Q1) Two broad purposes of the NTA were to
A)Increase nurses' pay and the nursing quality
B)Increase the number of nurses and the nursing quality
C)Increase the number of nurses and nurses' pay
Q2) What are the benefits and cost of a comparable worth-based wage determination system.
Q3) According to Buerhaus,et.al,there will be nurse shortage in the near future due to
A)Improve economic conditions
B)An aging of the nursing stock
C)Both a and b
D)Neither a nor b
Q4) 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
Q5) Explain why the ANA would support educational subsidies to attend nursing school.
Q6) Explain why prior to 1966,the nursing market was experiencing a static shortage.
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Chapter 18: National Health Insurance: an Approach to the
Redistribution of Medical Care
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Sample Questions
Q1) Hospital services are covered by
A)Medicare Part A
B)Medicare Part B
C)Medicare Part C
D)Medicare Part D
Q2) Physician services are covered by
A)Medicare Part A
B)Medicare Part B
C)Medicare Part C
D)Medicare Part D
Q3) Medicaid is financed using a
A)Progressive tax
B)Regressive tax
C)Flat tax
D)None of the above
Q4) Explain how a comparative effectiveness board could reduce health care cost.
Q5) According to Long and Stockley,what are the benefits and cost of the Massachusetts Health Plan?
Q7) Why is deficit financing politically appealing? Page 20
Q6) What are the benefits and costs of an individual health insurance mandate.
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Page 21