Chapter 1 1. What does Medicare Part C do? a. Provides the aged with home health care b. Provides the aged with prescription drugs c. Enables low-income aged to participate in Medicaid
*d. Provides a voluntary managed care option for the aged
2. How is Medicaid administered?
*a. By each state b. By the federal government c. Jointly by each state and the federal government d. By insurers under contract with the federal government
3. How is Medicaid financed? a. It is financed entirely by the federal government. b. It is financed entirely by the state. c. States receive the same percentage of federal support.
*d. States with lower per capita incomes receive a greaterpercentage of federal support.
4. The Affordable Care Act a. did not make any changes to the Medicaid program.
*b. increased Medicaid eligibility. c. reduced funding for Medicaid. d. required adult Medicaid recipients to buy their insurance onhealth insurance exchanges.
5. Which of the following statements describes how the financing of UShealthcare
has changed over time? a. The federal government now finances 76 percent of totalhealthcare
expenditures. *b. Out-of-pocket payments represent less than 15 percent oftotal healthcare expenditures. c. Expenditures for prescription and over-the-counter drugs areas great as hospital expenditures. d. None of the above
6. In the past ten years, medical expenditures have risen more slowlyprimarily
because of a. the introduction of the Affordable Care Act. b. stringent Medicare price controls on hospitals and physicians. c. state regulation of health insurance premiums.
*d. a severe recession, greater number of uninsured people, andfewer employees with employer-paid health insurance.
7. In coming years, medical expenditures are expected to rise at afaster rate
because of a. the growing economy. b. increased demand as a result of the Affordable Care Act. c. the development of new technology and expensive specialtydrugs.
*d. All of the above
8. The growth in private health insurance was stimulated by a. federal and state subsidies.
*b. higher per capita income and tax-exempt employer-paid healthinsurance. c. the growth of private managed care organizations. d. federal and state regulatory policies.
9. An effect of government regulating physician-fee increases to reducerising Medicare
physician expenditures was that a. physician participation rates in Medicare declined. b. physician participation rates in Medicare increased. c. access to care for Medicare patients declined.
*d. A and C 10. Managed care relies on which of the following to reduce enrollees’
premiums? a. Dramatically increasing enrollees’ out-of-pocket expenses
*b. Having providers compete to join limited provider networks c. Increasing specialists’ fees to provide them with an incentive to become more productive d. B and C
Chapter 2 1. Why is there a concern that this country is spending too much onmedical care? a. Insurers’ administrative costs are too high. b. Hospitals and physician prices are much higher than in othercountries.
*c. The country is not receiving sufficient value for what itspends on healthcare. d. The healthcare system is too regulated.
2. Consumer sovereignty is based on the concept that
*a. consumers know best what they want. b. consumer out-of-pocket payments should be higher so thatconsumers become more price sensitive. c. consumers should have greater representation on hospital andinsurer boards of directors. d. consumers should have more comprehensive insurance so thatthey have more control over their choice of provider.
3. The relationship between the benefits of an additional visit and thenumber of visits is a. constant. b. increasing.
*c. decreasing. d. A and B 4. What is the “right” or “optimal” amount of spending for a person? a. When the additional medical benefit provided to the patient isworthwhile, as
determined by a health professional *b. When the benefit of the last visit to the physician is equalto the cost to the consumer for that visit c. When the additional medical benefit of that visit isworthwhile, as determined by the patient d. When the benefit of the last visit to the physician isconsidered appropriate according to clinical guidelines
5. Economic waste occurs when
*a. the expected benefits of an intervention are less than theexpected costs. b. the expected benefits of an intervention have very littleperceived value to the health professional. c. the expected benefits of an intervention have very littleperceived value to the patient.
d. the expected benefits of an intervention do not meetestablished
clinical guidelines.
6. Competitive markets in healthcare assume that a. government determines the appropriate training and number ofcompetitors. b. purchasers have information on the benefits of a treatment,provider
quality, and the costs of care. c. purchasers have a price incentive when making their choices. *d. B and C 7. If a healthcare system is “free” to everyone, and the government
provides all the care demanded, then a. everyone receives the “appropriate” amount of care.
*b. the benefits of an additional visit are very low. c. the benefits of an additional visit are very high. d. the benefits of an additional visit in relation to the cost ofproduction are unknown. 8. If a healthcare system is “free” to everyone, and the governmentlimits the
amount of care provided, then a. those who can afford it go elsewhere—to another country—fortheir care. b. a shortage occurs. c. “too few” visits result.
*d. All of the above
9. State and federal governments typically try to limit medicalexpenditure
increases by a. encouraging insurers to use limited provider networks. b. incentivizing Medicare beneficiaries to enroll in managed careplans.
*c. instituting provider price controls. d. promoting high-deductible health plans. 10. The government’s concern over rising healthcare costs is to ensure
that a. universal coverage occurs.
*b. the government doesn’t have to increase taxes or reduce politically popular programs. c. the voting public receives value for its money. d. appropriate new technologies are not overused.
Chapter 3 1. If the objective of an organization, such as a managed care firm, isto increase its
enrollees’ health, then the organization should spent more money on a. medical services. b. prevention. c. changing its enrollees’ lifestyle.
*d. Cannot tell without further information
2. A health production function
*a. examines the relative contribution of each factor thataffects health to determine the most cost-effective way toimprove health. b. is an economic phrase that has little relevance to healthcare. c. examines which health inputs are most effective in improvinghealth. d. examines the relative cost of each input used to decreaseneonatal infant mortality.
3. As more is spent on a health input, the marginal (additional)improvement in
health a. increases at an increasing rate.
*b. increases at a decreasing rate. c. is constant. d. None of the above
4. If everyone agrees that additional lives could be saved if more infants were
admitted to neonatal intensive care units (NICUs), then a. NICUs should be given the highest priority for additionalfunding to
decrease neonatal infant mortality rates. b. NICU funding should be the same as funding for other approaches to reduce neonatal infant mortality rates. c. NICU funding should be based on which programs achieve thelargest decrease in neonatal infant mortality. *d. NICU funding should be based on which program has the lowestcost per life saved.
5. Studies examining the various factors that improve life expectancyhave found that
the marginal contribution of medical care is a. relatively high. b. fairly constant over time.
*c. relatively low. d. unknowable.
6. The medical care people receive today is far superior to treatmentsreceived 30
years ago. Does that mean that the medical care system is more efficient today than in the past? a. Yes, because people have shorter lengths of stay in thehospital and
live longer b. No. People use too much medical care because their insurancepays for most of their care c. No, because payments to hospitals and physicians do notprovide them with appropriate efficiency incentives *d. B and C
7. According to the study by Corman and Grossman, what factors weremost
important in lowering the neonatal infant mortality rate for whites since 1965? a. Increased availability of NICUs and abortion
*b. Increased educational levels and subsidized nutritionalprograms c. Family planning services for low-income women and increasedavailability of NICUs d. Subsidized obstetric services and abortion
8. What is the leading cause of death in the United States?
*a. Cardiovascular disease b. Homicide c. Cancer d. Accident
9. Since 1970, there has been a rapid decrease in mortality from heartdisease. What
has been the main contributor to this decrease? a. Improvements in medical technology, such as coronary bypasssurgery,
coronary care units, and angioplasty b. Development of new treatment techniques *c. Prevention (including new drugs to control hypertension andhigh cholesterol) and changes in lifestyle (such as smoking cessation, exercise, and diet) d. Increased insurance coverage
10. When government medical expenditures are analyzed, is it appropriate to conclude
that the main objective of such expenditures isto improve health and decrease mortality rates? a. Yes, because many more people—such as those who are low incomeand the
aged—are provided with subsidized coverage b. No, because very large subsidies are provided to the politically important aged and do not improve health levels as
much as if those funds were spent in other ways and on otherpopulation groups c. No, because an important role of government is to assist thosewith low income who cannot afford to buy medical services *d. B and C
Chapter 4 1. If the physician were a perfect agent for the patient, then thephysician would
prescribe medical services to the patient a. according to accepted clinical guidelines, regardless of theircost to the patient
or the insurer. b. taking into consideration which mix of services is leastcostly to society and/or the insurer. *c. taking into account the patient’s ability to pay and preferences, even though the choice may not be the least costlymix of services. d. using the latest medical advances and available technologyconsistent with the malpractice laws in that state.
2. In a market where physicians are perfect agents and physician supplyincreases faster
than demand for physicians, a. the price of physician service is expected to increase.
*b. the price of physician service is expected to decrease. c. the price of physician service is expected to be constant. d. the number of physician visits is expected to decrease.
3. Supplier-induced demand refers to which of the following? a. When physicians are a supplier of a service, they use theirinformation
advantage over patients and insurers to benefit themselves. b. If physicians’ income falls, they use their role as theirpatients’ agent to prescribe additional services. c. When supply increases faster than demand for physicians, the price of physician services does not decline but either increasesor stays the same. *d. All of the above
4. Demand inducement is more likely to occur among a. physicians in managed care plans, such as a health maintenanceorganization
(HMO). *b. physicians paid fee-for-service by their insurers. c. physicians whose patients are generally low income. d. physicians who have been in practice for a long time.
5. To prevent demand inducement, insurers have a. developed utilization review programs. b. created preferred provider organizations of physicians. c. instituted training programs for recently licensed physicians.
*d. A and B
6. Physicians are an imperfect agent in an HMO if they responded to aprofit
incentive *a. by serving a larger number of patients and providing fewerservices to each patient. b. by providing their patients with the appropriate medicalservices. c. by referring patients only to HMO providers. d. by referring patients to HMO and non-HMO providers. 7. Why does the physician have a role as the patient’s agent? a. Because the patient or the patient’s insurer pays the
physician for services rendered b. Because the patient lacks the necessary information to makemany medically related decisions c. Because only physicians are legally permitted to providecertain services *d. B and C
8. Which of the following is an example of a physician being a perfectagent for a
patient? a. A physician whose patient does not have insurance tells the patient she
must return for multiple office visits even thoughone office visit is sufficient. b. A physician whose patient has insurance containing a narrow provider network sends the patient to a non-network provider. *c. A physician whose patient only has insurance for hospital care hospitalizes the patient for a diagnostic workup rather thanperforming the service at an outpatient facility. d. A physician whose patient does not have prescription drug coverage prescribes a branded drug when a generic equivalent isavailable.
9. When is it rational for a physician to prescribe additional care to a patient even when
the resource costs of that care exceed the benefitsto the patient? a. When the patient has comprehensive insurance with no
copayments b. When the physician is paid fee-for-service c. When the physician acts as a perfect agent to the patient *d. All of the above
10. According to the theory of supplier-induced demand, when will asurgeon stop
inducing demand?
a. The surgeon will continue to induce demand until he believesthat his
reputation has begun to suffer. *b. The surgeon will continue to induce demand to the point atwhich the additional revenue she receives is not worth the psychological cost of prescribing additional services. c. The surgeon will continue to induce demand to the point at which the patient believes the additional benefits of further visits are not worth the additional costs incurred. d. The surgeon will continue to induce demand until the insurer threatens to exclude him from the insurer’s provider network.