17) All of the following are part of the “state health exchanges” provision of the Patient
Protection and Affordable Care Act (PPACA) except
A) each state is required to establish an Affordable Insurance Exchange by 2014.
B) small businesses with fewer than 50 employees will be exempt from being required to
participate in the program.
C) low-income individuals will be eligible for tax credits to offset the costs of buying health
insurance.
D) health insurance policies that meet certain specified requirements will be offered by state-run
agencies or by non-profit firms.
18) Under the Small Business Health Options Program (SHOP) provision of the health care plan,
a small firm’s employees would be pooled with the employees of other small firms. When an
insurance plan covers a large number of people,
A) moral hazard is reduced.
B) adverse selection problems are reduced.
C) asymmetric information issues are eliminated.
D) negative externalities become more pronounced.
19) All of the following are part of the “regulation of health insurance” provision of the Patient
Protection and Affordable Care Act (PPACA) except
A) individuals with pre-existing medical conditions will be able to acquire health insurance.
B) all policies must provide coverage for dependant children up to age 26.
C) lifetime dollar maximums on coverage will be prohibited.
D) limits on the size of deductibles and on waiting periods before coverage takes effect will be
eliminated.
20) All of the following are part of the “taxes” provision of the Patient Protection and Affordable
Care Act (PPACA) except
A) pharmaceutical firms and health insurance firms will pay a new taxes.
B) investors earning more than $200,000 will pay a new tax on their investment income.
C) beginning in 2018, all taxes on employer-provided health insurance plans will be reduced or
eliminated.
D) workers earning more than $200,000 will have their share of the Medicare payroll tax
increase.
21) The Congressional Budget Office estimates that the Patient Protection and Affordable Care
Act (PPACA) will
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.
22) The Patient Protection and Affordable Care Act (PPACA) is scheduled to be fully
implemented by 2019, at which point
A) current budget cuts are expected to have completely offset the cost of the program.
B) more than 30 million additional individuals are expected to have health care coverage.
C) all hospitals in the United States will be taken over by the federal government.
D) private health insurance companies will no longer exist in the United States.
23) Some economists and policymakers who are in favor of government-provided health care
believe that providing health care will generate
A) additional moral hazard.
B) positive externalities.
C) greater asymmetric information.
D) more adverse selection.
24) Economists who support market-based reforms for health care believe that increased
competition among providers of health care would ________ costs and ________ economic
efficiency.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
25) A goal of market-based reforms of the health care system is to give patients an incentive to
pay more attention to the prices of medical services. This would tend to ________ economic
efficiency by ________ the costs of medical services
A) increase; increasing
B) increase; decreasing
C) decrease; increasing
D) decrease; decreasing
26) Most employees ________ pay taxes on the value of health insurance provided by
employers, and most people ________ get a tax break when buying individual health insurance
policies.
A) do; do
B) do; do not
C) do not; do
D) do not; do not
27) Some economists have proposed making the tax treatment of employer-provided health
insurance the same as the tax treatment of individually purchased health insurance and out-of-
pocket health care spending. Such changes would make it more likely that
A) consumers would pay prices closer to the actual costs for routine medical care.
B) employers would provide more generous medical coverage to their employees.
C) insurance deductibles would decrease.
D) the quantity of medical services demanded would increase.
28) Economists John Cogan, R. Glenn Hubbard, and Daniel Kessler have estimated that
repealing the tax preference for employer-provided health insurance would
A) significantly reduce the effectiveness of the health care received by those enrolled in these
programs.
B) increase overall spending on health care as consumers would have to pay a higher price for
medical services.
C) drive up prices for health care coverage since insurance reimbursements to doctors would be
reduced.
D) reduce spending by people enrolled in these programs by 33 percent.
29) Which of the following reforms could potentially reduce spending on health care without
reducing the effectiveness of health care received?
A) nationalize health care so that all health services are government funded and operated
B) give every citizen a fixed amount of money that can only be spent on health care services
C) reimburse consumers for preventive health care expenditures so as to avoid costly emergency
medical treatments in the future
D) standardize the tax treatment of employer-based health insurance benefits and private
spending on health care
30) Under the Small Business Health Options Program (SHOP) provision of the health care plan,
a small firm’s employees would be pooled with the employees of other small firms. When an
insurance plan covers a large number of people,
A) moral hazard is reduced.
B) adverse selection problems are reduced.
C) asymmetric information issues are eliminated.
D) negative externalities become more pronounced.
31) Some economists believe that by making health care coverage mandatory for all individuals,
the demand for medical services will likely ________, which will ________ the costs of health
care.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
32) An analysis of the Patient Protection and Affordable Care Act (PPACA) by Medicare
officials claims that additional annual health care spending over the next decade under the
PPACA will
A) more than double.
B) rise by 10 percent for the first 5 years and then fall by 20 percent for the remaining 5 years.
C) continually increase until it reaches an annual rate of 25 percent.
D) increase by less than 1 percent.
33) The rising cost of malpractice insurance is one of le leading causes of the increase in health
care spending as a percentage of GDP in the United States.
34) “Cost disease” refers to the tendency for low productivity in the service sector to lead to
higher costs in those industries.
35) Under the Patient Protection and Affordable Care Act (PPACA), residents who do not have
health insurance will not be allowed to seek employment.
36) 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.
37) Those who favor changes in the market for health care that would make it more like the
markets for other goods and services are generally in favor of universal health care coverage.
38) In most circumstances, employees do not pay taxes on the value of health insurance their
employers provide them.
39) What has happened to health care’s share of gross domestic product in the United States
since 1965? How does this compare to what has happened to out-of-pocket spending on health
care as a percentage of all spending on health care?
40) Briefly describe are the 6 main provisions of the Patient Protection and Affordable Care Act
(PPACA)?
41) 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
42) Explain what is sometimes referred to as the “adverse selection death spiral” as it pertained
to the collapse of the California health insurance exchange.