Chapter 23 – Health Care
Chapter 23 Health Care
Multiple Choice
1. The U.S. spends approximately ____ of GDP on health care.
A) 1% (1/100th)
B) 16% (1/6th)
C) 25% (1/4th)
D) 33% (1/3rd)
2. The government spends ___ of all health care dollars in the U.S.
A) 10%
B) 25%
C) 52%
D) 100%
3. The percentage of people without health insurance at some time during 2009 was
A) 80%
B) 20%.
C) 8%.
D) 2%.
4. Medicare is the Federal Government program that provides health insurance to the
A) poor.
B) injured.
C) elderly.
D) unemployed.
5. Medicaid is the Federal Government program that provides health insurance to the
A) poor.
B) injured.
C) elderly.
D) handicapped.
Chapter 23 – Health Care
6. Which Federal Government program(s) pay(s) for the health needs of people who are old and
poor?
A) Medicare
B) Medicaid
C) WIC
D) Medicare and Medicaid
7. Government spent approximately _____ on health care in 2009.
A) $1,280 billion
B) $1,280 trillion
C) $431 million
D) $7.66 million
8. Government spending accounts for _________ the private market in health care
expenditures.
A) much more than
B) slightly more than
C) slightly less than
D) much less than
9. In 2009 the percentage of people covered by health insurance for the entire year was
A) 40%.
B) 65%.
C) 80%.
D) 95%.
10. In 2009 the percentage of people who were not covered by health insurance for the entire
year was
A) 12%.
B) 15%.
C) 25%.
D) 55%.
Chapter 23 – Health Care
11. The majority of people with private health insurance get it
A) individually.
B) in groups.
C) at the grocery store.
D) along with one other person.
12. Combined, Medicare and Medicaid cover
A) 6 million people.
B) 25 million people.
C) 104 million people.
D) 143 million people.
13. People generally buy insurance of any kind because they are
A) risk neutral.
B) risk loving.
C) risk averse.
D) risk seeking
14. Being risk averse means that you would be willing to pay _____ than the expected outcome
in order to guarantee an outcome.
A) less
B) more
C) no more or less
D) more or less
15. Suppose someone knew that the probability of incurring a $10,000 medical expense was 5%
and the odds of being healthy and incurring no expenses was 95%. If they used that
information to compare the expected cost to them ($500) with the $600 premium it would
cost to get full coverage and decided to buy the insurance then economists would say they are
A) irrational
B) risk loving
C) risk averse
D) risk neutral
Chapter 23 – Health Care
16. Suppose someone knew that the probability of incurring a $10,000 medical expense was 5%
and the odds of being healthy and incurring no expenses was 95%. If they used that
information to compare the expected cost to them ($500) with the $500 premium it would
cost to get full coverage and decided to buy the insurance but only if the price went no higher
then economists would say they are
A) irrational.
B) risk loving.
C) risk averse.
D) risk neutral.
17. Suppose someone knew the probability of incurring a $10,000 medical expense was 5% and
the odds of being healthy and incurring no expenses was 95%. If they used that information
to compare the expected cost to them ($500) with the $400 premium it would cost to get full
coverage and decided not to buy the insurance then economists would say they are
A) irrational.
B) risk loving.
C) risk averse.
D) risk neutral.
18. A deductible is the
A) percentage of a covered expense that an individual will have to pay.
B) percentage of a covered expense that an insurance company will have to pay.
C) amount of covered expense that an individual will have to pay before the insurance
company pays anything.
D) amount of covered expense that an insurance company will have to pay before the
individual pays anything.
19. A co-payment is the
A) percentage of a covered expense that an individual will have to pay (after the deductible
is met.)
B) percentage of a covered expense that an insurance company will have to pay (after the
deductible is met.)
C) amount of covered expense that an individual will have to pay before the insurance
company pays anything.
D) amount of covered expense that an insurance company will have to pay before the
individual pays anything.
Chapter 23 – Health Care
20. The maximum out of pocket is the
A) percentage of a covered expense that an individual will have to pay (after the deductible
is met.)
B) percentage of a covered expense that an insurance company will have to pay (after the
deductible is met.)
C) most of covered expense that an individual will have to pay during a year.
D) amount of covered expense that an insurance company will have to pay before the
individual pays anything.
21. The lifetime maximum is the
A) percentage of a covered expense that an individual will have to pay (after the deductible
is met.)
B) percentage of a covered expense that an insurance company will have to pay (after the
deductible is met.)
C) most of covered expenses that an individual will have to pay during a year.
D) most of covered expenses that an insurance company will pay on an individual over their
lifetime.
22. If a person must pay the first $300 of covered health care expenses in a year, this is called
their
A) co-payment.
B) deductible.
C) lifetime maximum.
D) maximum out-of-pocket.
23. If a person must pay 20% of a covered health care expense, this is called their
A) co-payment.
B) deductible.
C) lifetime maximum.
D) maximum out-of-pocket.
24. If a person must pay for all health care expenses in excess of $1,000,000, this is called their
A) co-payment.
B) deductible.
C) lifetime maximum.
D) maximum out-of-pocket.
Chapter 23 – Health Care
25. If a person does not have to pay more than $3,000 in a year for health care expenses, this is
called their
A) co-payment.
B) deductible.
C) lifetime maximum.
D) maximum out-of-pocket.
26. If the deductible is $200 and the co-payment is 20%, on a covered expense of $1200 the
individual will pay _____ and their insurance company will pay ______.
A) $400;$800
B) $200; $1000
C) $800; $400
D) $600; $600
27. If the deductible is $300 and the co-payment is 20%, on a covered expense of $800 the
individual will pay _____ and their insurance company will pay ______.
A) $300; $500
B) $300; $400
C) $400; $400
D) $500; $300
28. If the deductible is $500 and the co-payment is 20%, on a covered expense of $1000 the
individual will pay _____ and their insurance company will pay ______.
A) $500; $500
B) $500; $600
C) $600; $400
D) $400; $600
29. If the deductible is $400 and the co-payment is 25%, on a covered expense of $800 the
individual will pay _____ and their insurance company will pay ______.
A) $500; $500
B) $500; $300
C) $300; $500
D) $500; $100
Chapter 23 – Health Care
30. If a person has a deductible of $300 and must pay $400 out of a $1,300 health care expense
in a year, then their co-payment rate is
A) 5%.
B) 10%.
C) 20%.
D) 50%.
31. Which of the following was made illegal under the Patient Protection and Affordable Care
Act
A) co-payment.
B) deductible.
C) lifetime maximum.
D) maximum out-of-pocket.
32. If a person has a deductible of $300 and must pay $500 out of a $1,300 health care expense
in a year, then their co-payment rate is
A) 5%.
B) 10%.
C) 20%.
D) 50%.
33. A physician whose job is to determine if a patient needs to be referred to a specialist is called
A) an intern.
B) a primary care physician.
C) an HMO doctor.
D) a primatologist.
34. Fee-for-service insurance
A) is typically more expensive than an HMO covering the same illnesses.
B) has fewer meddlesome bureaucrats than an HMO.
C) allows patients to pick their own doctor.
D) all of the options are correct.
Chapter 23 – Health Care
35. Fee-for-service insurance
A) is typically more expensive than an HMO covering the same illnesses.
B) has more meddlesome bureaucrats than an HMO.
C) does not allow patients to pick their own doctor.
D) requires you pay for services before they are performed.
36. Fee-for-service insurance
A) is typically less expensive than an HMO covering the same illnesses.
B) has fewer meddlesome bureaucrats than an HMO.
C) does not allow patients to pick their own doctor.
D) requires you pay for services before they are performed.
37. Fee-for-service insurance
A) is typically less expensive than an HMO covering the same illnesses.
B) has more meddlesome bureaucrats than an HMO.
C) allows patients to pick their own doctor.
D) requires you pay for services before they are performed.
38. HMO insurance
A) is less expensive than fee-for-service insurance.
B) has more meddlesome bureaucrats than fee-for service.
C) restricts doctor choice to primary care physicians.
D) all of the options are correct.
39. HMO insurance
A) is less expensive than fee-for-service insurance.
B) has fewer meddlesome bureaucrats than fee-for service.
C) does not restrict doctor choice to primary care physicians.
D) requires all care be taken in hospitals.
40. HMO insurance
A) is more expensive than fee-for-service insurance.
B) has more meddlesome bureaucrats than fee-for service.
C) does not restrict doctor choice to primary care physicians.
D) requires all care be taken in hospitals.
Chapter 23 – Health Care
41. HMO insurance
A) is more expensive than fee-for-service insurance.
B) has fewer meddlesome bureaucrats than fee-for service.
C) restricts doctor choice to primary care physicians.
D) requires all care be taken in hospitals.
42. An insurance plan that carries a low annual premium but also a low annual maximum amount
that insurance will cover is called a
A) mini-med.
B) an HMO.
C) a PPO.
D) a fee for service provider.
43. Which public health care program is divided between “part A” and “part B”?
A) Medicare
B) Medicaid
C) US Health
D) WIC
44. Part A of Medicare covers
A) prescriptions taken out of the hospital.
B) only charges incurred in a hospital.
C) doctor visits outside of a hospital.
D) all health care needs.
45. Part B of Medicare covers
A) prescriptions taken out of the hospital.
B) only charges incurred in a hospital.
C) doctor visits outside of a hospital.
D) all health care needs
Chapter 23 – Health Care
46. The Children’s Health Insurance Program is designed to
A) replace Medicaid for children.
B) replace Medicaid for families with children.
C) augment Medicaid by insuring the children of working (but low income) families who
have no insurance.
D) insure all children regardless of circumstance.
47. The Children’s Health Insurance Program was created in the
A) 1940s.
B) 1960s.
C) 1980s.
D) 1990s.
48. Health Care is not like other goods and services because
A) people go to the doctor to find out what is wrong whereas they get other services
knowing more about what they need.
B) we tend to like to go to the doctor and do it for enjoyment whereas we hate going to the
dentist.
C) if a newly discovered cure costs a lot we say, incorrectly, that its price has risen.
D) people go to the doctor to find out what is wrong whereas they get other services
knowing more about what they need and if a newly discovered cure costs a lot we say,
incorrectly, that its price has risen.
49. Health Care is not like other goods and services because
A) people go to the doctor to find out what is wrong whereas they get other services
knowing more about what they need.
B) we tend to like to go to the doctor and do it for enjoyment whereas we hate going to the
dentist.
C) people do not have to pay for it.
D) there is no motive to consume more than is economically efficient.
50. Health Care is not like other goods and services because
A) if a newly discovered cure costs a lot we say, incorrectly, that its price has risen
B) we tend to like to go to the doctor and do it for enjoyment whereas we hate going to the
dentist.
C) people do not have to pay for it.
D) there is no motive to consume more than is economically efficient.
Chapter 23 – Health Care
51. If, over the years, the standard night in a hospital has risen in price from $200 a night to
$1000 a night but now also includes amenities, then economists insist that the price
A) has risen $800 over that period.
B) has definitely risen but by less than $800 over that period.
C) has definitely risen and by more than $800 over that period.
D) may have risen or fallen depending on the value of the amenities.
52. Effective AIDS drugs did not exist in the early 1980s. When they became available they were
very expensive. When people use these facts to say that the price of AIDS drugs has
increased economists generally
A) agree.
B) suggest they are confusing price increases with quality increases.
C) note that the drugs are not as effective as advertised.
D) stay out of this discussion.
53. Effective AIDS drugs did not exist in the early 1980s. When they became available they were
very expensive. When people use these facts to say that the price of AIDS drugs has
increased economists generally
A) agree.
B) suggest that the price actually fell.
C) note that the drugs are not as effective as advertised.
D) stay out of this discussion.
54. When creating market demand curves for privately produced and privately consumed goods
we
A) add the quantity demanded at each price.
B) add the price paid at each quantity.
C) take an average of the quantity demanded at each price.
D) take an average of the price paid at each quantity.
55. When creating a demand curve for a good where one group gets the good for free and
another group must pay the market price you must
A) add the quantity demanded for each group at each price.
B) add the price paid at each quantity.
C) take an average of the quantity demanded at each price.
D) add the amount that the first group wants (when it is available to them free) to the
quantity demanded by the second group at each price.
Chapter 23 – Health Care
56. Publicly provided health insurance for the poor will
A) raise the price of health care to the non-poor.
B) raise the level of health care consumed by the non-poor.
C) decrease the total amount of health care consumed.
D) raise the price of health care to the non-poor and decrease the total amount of health care
consumed.
57. Publicly provided health insurance for the poor will
A) lower the price of health care to the non-poor.
B) raise the level of health care consumed by the non-poor
C) increase the total amount of health care consumed
D) lower the price of health care to the non-poor and increase the total amount of health care
consumed.
58. Publicly provided health insurance for the poor will
A) raise the price of health care to the non-poor.
B) raise the level of health care consumed by the non-poor.
C) increase the total amount of health care consumed.
D) raise the price of health care to the non-poor and increase the total amount of health care
consumed.
59. Publicly provided health insurance for the poor will
A) lower the price of health care to the non-poor.
B) raise the level of health care consumed by the poor.
C) decrease the total amount of health care consumed.
D) lower the price of health care to the non-poor and decrease the total amount of health care
consumed.
60. Publicly provided health insurance for the poor will
A) lower the price of health care to the poor.
B) lower the level of health care consumed by the poor.
C) increase the total amount of health care consumed.
D) lower the price of health care to the non-poor and increase the total amount of health care
consumed.
Chapter 23 – Health Care
61. When an insurance company pays 20% of the bill for health care services, this
A) reduces demand.
B) reduces supply.
C) makes demand less elastic.
D) reduces demand and makes demand less elastic.
62. When an insurance company pays 20% of the bill for health care services, this
A) increases supply.
B) reduces demand.
C) makes demand less elastic.
D) reduces demand and makes demand less elastic.
63. When neither the patient nor the doctor is cost conscious as a result of health insurance,
economists label this the
A) moral hazard problem.
B) the insurance fiasco.
C) risk neutrality.
D) efficiency outcome.
64. Many economists note that the shortage of organs is, at least in part, attributable to the fact
that the price of organs is
A) determined by market forces.
B) kept too high.
C) right at equilibrium.
D) fixed at zero.
65. Many economists note that the shortage of blood in several rare types is, at least in part,
attributable to the fact that the price of blood is
A) determined by market forces.
B) kept too high.
C) right at equilibrium.
D) fixed at zero.
Chapter 23 – Health Care
66. Moral Hazard
A) is the fact that having insurance increases the demand for the good.
B) is the fact that people will consumer more health care when they pay only a percentage.
C) does not apply to health insurance.
D) is the fact that having insurance increases the demand for the good and it does not apply
to health insurance.
67. If a health economist is worried that a system of health insurance will break down because
those with health insurance will be less likely to eat right and exercise because they will not
be financially liable for the health care costs that follow, that economist is focused on the
problem of
A) moral hazard.
B) adverse selection.
C) mandation.
D) lack of universal coverage.
68. If a health economist is worried that a system of health insurance will break down because,
when combined with policies outlawing the use of an individual’s health information in
setting coverage and rates, the sickest will be the only one who will want insurance and the
healthiest will go without insurance, that economist is focused on the problem of
A) moral hazard.
B) adverse selection.
C) mandation.
D) lack of universal coverage.
69. If a health economist is worried that a system of health insurance will break down because of
the problem of adverse selection, that economist may focus on ____ as a solution to that
problem.
A) moral hazard
B) eliminating pre-existing condition clauses
C) mandation
D) lowering insurance premiums
Chapter 23 – Health Care
70. On health care issues, the US generally spends
A) much more as a percentage of GDP than other nations.
B) almost exactly the same percentage of GDP as other nations.
C) much less as a percentage of GDP as other nations.
D) a more rapidly decreasing percentage of GDP than other nations.
71. Relative to the U.K., Japan, Germany and France, life expectancy in the US is
A) higher by more than ten years.
B) higher by one to four years.
C) lower by more than ten years.
D) lower by one to four years.
72. In terms of who employs physicians, who owns hospitals and clinics, and the role of
insurance
A) single payer systems are all alike.
B) single payer systems are no different than private systems.
C) single payer systems are all private.
D) single payer systems are very different depending on the country.
73. In terms of the percentage of health expenditures spent by governments, single payer systems
are
A) more than 100%.
B) by definition 100%.
C) typically between 60% and 90%.
D) typically under 50%.
74. A cross-country analysis of health statistics suggests that countries with single payer systems
have infant mortality rates that are _____ than those rates for the U.S. and survival rates for
breast and prostate cancer that are _____ than those rates for the U.S.
A) higher, higher
B) higher, lower
C) lower, higher
D) lower, lower
Chapter 23 – Health Care
75. A cross-country analysis of health expenditures and statistics suggests that expenditures (as a
percentage of GDP) in the U.S. are ____ than the rest of the world, and that treatment in the
U.S. is
A) higher; less effective in some areas and more effective in other areas.
B) lower; less effective in some areas and more effective in other areas.
C) higher; unambiguously better in all areas
D) higher; unambiguously worse in all areas
76. Nations with single payer systems typically have
A) higher tax rates than exist in the US.
B) lower life expectancies than in the US.
C) better access to high-tech medical solutions than in the US.
D) serious inequality in the access to basic care.
77. Nations with single payer systems typically have
A) lower tax rates than exist in the US.
B) higher life expectancies than in the US.
C) better access to high-tech medical solutions than in the US.
D) serious inequality in the access to basic care.
78. Nations with single payer systems typically have
A) lower tax rates than exist in the US.
B) lower life expectancies than in the US.
C) worse access to high-tech medical solutions than in the US.
D) serious inequality in the access to basic care.
79. Nations with single payer systems typically have
A) lower tax rates than exist in the US.
B) lower life expectancies than in the US.
C) better access to high-tech medical solutions than in the US.
D) relative equality in the access to basic care.
Chapter 23 – Health Care
80. A single payer system in the United States would
A) increase availability of health care services to those who are currently uninsured.
B) necessitate a tax cut.
C) likely decrease the waiting time for certain procedures.
D) likely fail because no other nations have tried it.
81. A single payer system in the United States would
A) decrease availability of health care services to those who are currently uninsured.
B) necessitate a tax increase.
C) likely decrease the waiting time for certain procedures.
D) likely fail because no other nations have tried it.
82. A single payer system in the United States would
A) decrease availability of health care services to those who are currently uninsured.
B) necessitate a tax cut.
C) likely increase the waiting time for certain procedures.
D) likely fail because no other nations have tried it.
83. A single payer system in the United States would
A) decrease availability of health care services to those who are currently uninsured.
B) necessitate a tax cut.
C) likely decrease the waiting time for certain procedures.
D) likely face the same failures and successes as in the many other nations that have tried it.
84. According to the U.S. Census Bureau, hospitals in the United States are mostly
A) private
B) public
C) faith-based
D) for-profit
85. According to the U.S. Census Bureau, hospitals in the United Kingdom are mostly
A) private
B) public
C) public trusts
D) for-profit
Chapter 23 – Health Care
86. According to the U.S. Census Bureau, physicians in the United Kingdom are mostly
A) private fee for service professionals
B) public employees
C) private professionals charging government-imposed fees
D) locally elected officials
87. Public health care expenditures as a percent of total in France, Japan and the U.K. are
A) lower than in the U.S.
B) exactly 100%, since these are single-payer systems
C) exactly the same as the percent of hospitals that are publicly-owned in these countries
D) greater than 80%