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Chapter 30 Income, Poverty, and Health Care 1057
30.5 Health Care
1) Which of the following is considered a third party within the medical services industry?
A) The patient B) The private insurance company
C) The for profit hospital D) The medical provider, i.e. physician
2) According to the text, government spending accounts for about ________ percent of all U.S.
health care expenditures.
A) 70 B) 10 C) 30 D) 40
3) An important contributor to rising U.S. health care costs in recent years is
A) less interest on the part of Americans to stay physically fit.
B) the increasing proportion of the population that smokes.
C) an easing of standards at medical schools that has permitted unqualified people to become
physicians.
D) the aging of the population.
4) The percentage of national income spent on health care
A) has steadily decreased since 1965.
B) has steadily increased since 1965.
C) increased until the end of the 1970s and then decreased in the 1980s and 1990s.
D) decreased until the end of the 1970s and then increased in the 1980s and 1990s.
5) The impact of technological change in the health care area has been to
A) reduce the quality of health care while raising the costs.
B) reduce the cost of health care.
C) increase the quality of health care while decreasing the costs.
D) increase both the quality of health care and the costs of health care.
6) A problem with third party financing of so much of health care is that
A) it reduces the quality of health care received by most people.
B) it discourages physicians from getting second opinions and running enough tests to be
sure the right procedure is followed.
C) it causes the demand for medical services to increase, which causes health care costs to
increase.
D) it discourages people from relying on the judgments of physicians in making decisions
about health care.
7) Among the reasons that health care expenditures have grown so rapidly in the United States
over the last two decades are all of the following EXCEPT
A) an emphasis on wellness programs and preventive medicine.
B) the aging of the U.S. population.
C) expensive new medical technologies.
D) third party financing.
8) An individual with no deductible on his or her health insurance policy will tend to engage in a
lifestyle that is less healthy than a person with a $2,000 insurance deductible. This is said to be a
problem of
A) healthy selection. B) moral hazard.
C) wellness training. D)
b
lue zoning.
9) The top 5 percent of health care users in the United States account for
A) 30 percent of all health costs. B) over 50 percent of all health costs.
C) over 75 percent of all health costs. D) almost 90 percent of all health costs.
10) Which of the following is not a reason for rising health care expenditures in the United States
over the last 40 years?
A) Aging of the population
B) Technological change
C) Third party financing of health care expenditures
D) Discovery of new diseases
11) The impact of technological change in the health care area has been to
A) increase both the quality of health care and the monetary costs of health care.
B) increase the monetary costs of health care and decrease the quality of health care.
C) decrease the monetary costs of health care while decreasing the quality of health care.
D) increase longevity but decrease quality of life.
12) Rising health care spending is a problem confronting the federal government because
A) it is the government s job to make sure everyone receives the health care they need.
B) federal spending on health care has increased rapidly over the last thirty years.
C) the federal funded VA hospitals have been expanding faster than government revenues
can provide for.
D) the medical expenses of federal employees has been rising at a rate much faster than for
non federal workers.
13) An example of third party financing of health care is
A) patients paying for their visit to the doctor.
B) patients not going to the doctor in order to save money.
C) a patient going to another doctor for a second or a third opinion.
D) Medicare.
14) One problem with third party financing of health care is that
A) people have more incentive to utilize health care.
B) demand falls so that suppliers cannot take advantage of economies of scale.
C) it reduces the quality of health care people receive.
D) it discourages people from relying on their physicians advice in making health care
decisions.
15) What impact do private insurance companies and Medicare have on national medical costs?
A) Medical costs go up because insurance leads to an increase in the quantity demanded of
medical services.
B) Medical costs go up because insurance will lead to the reduction in the supply of medical
services due to the amount of paperwork required.
C) Medical cost are unaffected by insurance companies.
D) Medical costs go down because the insurance company pays the bill.
16) Other things being equal, a national health insurance program would
A) generate higher life expectancies and lower infant mortality rates.
B) generate lower life expectancies and higher infant mortality rates.
C) increase total health care expenditures.
D) increase the quality of life.
17) Other things being equal, a national health insurance program would
A) decrease the demand for health care.
B) decrease moral hazard.
C) decrease total health care expenditures.
D) reduce individuals incentives to make decisions that promote better health.
18) Rising healthcare costs are attributable to
A) people living longer and desiring more care.
B) reliance on expensive technology to support and prolong life.
C) third party financing of healthcare costs.
D) all of the above
19) A benefit of deductibles and health savings accounts is that they
A) reduce the moral hazard problem associated with third party payers.
B) increase the quality of health care.
C) reduce the use of expensive techniques for hopeless cases.
D) reduce the incomes of physicians.
20) The percentage of total national income spent on health care in the United States has
A) declined rapidly since 1965.
B) remained below the level of inflation.
C) risen steadily since 1965.
D) remained constant over the last few years.
21) The above figure supports all of the following statements regarding health care EXCEPT
A) the demand for health care is insensitive to price changes; as the price goes up, so does the
quantity demanded.
B) if all medical expenses were paid for by third parties, the quantity demanded would
increase tremendously.
C) due to third party payments, patients demand a higher quantity of health care services per
year.
D) the lower the deductible, the greater is the quantity demanded of health care services per
year.
22) Health care costs have been rising due to
A) an aging population. B) new technologies.
C) third party financing. D) All of the above are correct.
23) Approximately how much of aggregate national income in the United States is spent on health
care every year since 2000?
A) 5 percent B) 10 percent C) 15 percent D) 30 percent
24) The use of hospitals today is dominated by
A) the elderly. B) immigrants.
C) obstetrical care. D) the wealthy.
25) The impact of technology on health care has
A) provided for a higher quality of life.
B) increased health care costs.
C) contributed to increased life expectancy.
D) All of the above are correct.
26) All of the following are reasons that health care costs have risen so much in the past few
decades EXCEPT
A) the aging population. B) higher imports.
C) new technologies. D) third party payments.
27) The idea that some people engage in risky behavior due to the fact that they have good health
care is known as
A) moral hazard. B) risk aversion.
C) zero sum game. D) risk taking behavior.
28) The twin economic problems of the U.S. health care industry are the
A) rising health care costs and the declining quality of health care services.
B) rising health care costs and the rising malpractice insurance costs.
C) rising health care costs and the moral hazard problem in health care services.
D) declining rate of immunization rates and the rising malpractice insurance costs.
29) In the year 2010, the United States spent about
A) 16 percent of GDP on health care. B) 100 percent of GDP on health care.
C) 6 percent of GDP on health care. D) 2 percent of GDP on health care.
30) Currently less than ________ of all health care spending is paid by individuals.
A) 60 percent. B) 35 percent. C) 20 percent. D) 5 percent.
31) Which of the following is NOT a reason for the increase in health care costs?
A) the aging of the population B) the implementation of new technologies
C) the increase in third party payments D) the decrease in the fertility rate
32) The federal government and insurance companies are examples of third party
A) payers for health care. B) users of health care.
C) providers of health care. D) observers of health care.
33) Since the 1930s, out of pocket payments for health care have
A) declined from about 50 to 30 percent of total payments.
B) declined from about 95 to 20 percent of total payments.
C) declined from about 70 to 30 percent of total payments.
D) not changed and remain at 70 percent of total payments.
34) Which country has the highest per capita health care expenditures in the world?
A) Canada B) France C) United States D)
J
apan
35) The health care market in the United States is characterized by
A) considerable government involvement.
B) third party payment of health care costs.
C) asymmetric information between providers and consumers.
D) all of the above
36)
J
oseph decides to join the Big State University s football team when he learns that his health
insurance will pay for any subsequent injury. This illustrates
A) a moral hazard problem. B) monopolistic behavior.
C) a symmetric information problem. D) oligopolistic behavior.
37) A major benefit of a health savings account is that it
A) combats moral hazard.
B) means more health care services will be demanded.
C) eliminates rising health care costs.
D) creates the incentive to see a doctor regularly.
38) In insurance markets, moral hazard occurs when the behavior of
A) the insured person changes in a way that raises costs for the insurer, since the insured
person no longer bears the full costs of that behavior.
B) the insurer changes in a way that raises costs for the insured person, since the insurer no
longer bears the full costs of that behavior.
C) the insured person changes in a way that eliminates rising health care costs for the insurer,
since the insured person no longer bears the full costs of that behavior.
D) the insured person has an incentive to under consume medical services, simply because
the insured person no longer bears the full cost of medical services.
39) As a result of moral hazard,
A)
b
oth physicians and hospitals order more procedures.
B) physicians and hospital administrators have no incentive to raise costs.
C) patients increasingly have to worry about the expense of operations and other medical
procedures.
D)
b
oth physicians and hospitals have a financial interest in trying to keep hospital costs
down.
40) All of the following are key features of the new the federal government s national health care
program EXCEPT
A) people must either purchase health insurance or pay a fine to the federal government.
B) a young person in good health can opt not to purchase health insurance without penalty.
C) firms with at least 50 employees must either provide health insurance or pay fines when
uninsured employees receive tax subsidies to purchase insurance.
D) Government directed exchanges will assist in matching individuals and small businesses
with health insurance policies that satisfy government requirements.
41) Which of the following is an individual mandate in the new the federal government s new
national health
care program?
A) Under the new program, the federal government will coordinate the establishment of
health insurance exchanges.
B) Firms with at least 50 employees must either provide health insurance or pay fines when
uninsured employees receive tax subsidies to purchase insurance.
C) A tax rate of 3.8 percent will be assessed on nearly all earnings above $200,000 per year for
individuals and above $250,000 per year for married couples.
D) Nearly all U.S. residents must either purchase health insurance coverage or pay a fine of
up to $750 per year for an individual (up to $2,250 per year for a family).
42) Which of the following is an employer mandate in the new the federal government s new
national health
care program?
A) Under the new program, the federal government will coordinate the establishment of
health insurance exchanges.
B) A tax rate of 3.8 percent will be assessed on nearly all earnings above $200,000 per year for
individuals and above $250,000 per year for married couples.
C) Firms with at least 50 employees must either provide health insurance or pay fines when
uninsured employees receive tax subsidies to purchase insurance.
D) Nearly all U.S. residents must either purchase health insurance coverage or pay a fine of
up to $750 per year for an individual (up to $2,250 per year for a family).
43) How will the new federal government s new national health care program be funded?
A) The federal government will charge all participants of health insurance exchanges 3.8%.
B) Firms with at least 50 employees must pay an annual fine of up to $750 per employee
regardless of coverage.
C) A tax rate of 3.8 percent will be assessed on nearly all earnings above $200,000 per year for
individuals and above $250,000 per year for married couples.
D) Nearly all U.S. residents will pay a fine of up to $750 per year for an individual (up to
$2,250 per year for a family) regardless of coverage.
44) The new federal government s national health care program imposes the following regulations
on health care insurers EXCEPT
A) health insurers must cover all who apply, including people who already have health
problems.
B) all new plans must cover certain preventive services such as mammograms and
colonoscopies but must be paid 100% by patients.
C) a ceiling is imposed on the rate of increase in health insurance prices charged to elderly
people.
D) insurance companies will be prohibited from imposing lifetime dollar limits on essential
benefits, like hospital stays.
45) Government agencies to which the national health care program assigns the task of assisting
individuals, families, and small businesses in identifying health insurance policies to purchase
are known as
A) health care exchanges. B) markets for health care.
C) health insurance regulations. D) health insurance mandates.
46) Which of the following is NOT a subsidy in the new the federal government s new national
health care program?
A) Families with incomes up to 133% of the federal poverty level are eligible for federal
Medicaid coverage.
B) Families with incomes up to 400% of the federal poverty level are eligible for thousands of
dollars in tax subsidies per year (amounts vary with family incomes).
C) Tax credits are available to businesses providing health insurance to 25 or fewer workers
and paying annual salaries averaging no more than $50,000.
D) A special subsidy rate of 3.8% is applied to nearly all income earnings above $200,000 for
individuals or $250,000 for married couples.
47) Once the national health care program goes into effect and more people will pay fewer of their
health care expenses out of their own pockets than they did previously, we can expect
A) the quantity of health care services demanded will increase.
B) the quantity of health care services demanded will decrease.
C) the quantity of health care services supplied will increase.
D) the quantity of health care services supplied will decrease.
48) Once the national health care program goes into effect, we can expect
A) total expenditures on health care will decrease.
B) more individuals will have more incentives to make decisions that promote better health.
C) total expenditures on health care will increase.
D) moral hazard will decrease.
49) Once the national health care program goes into effect, we can expect
A) the quantity of health care services supplied will increase.
B) total expenditures on health care will decrease.
C) more individuals will pay more out of pocket expenses.
D) moral hazard will increase.
50) The effects of the national health care program on labor markets will
A) lower the effective wage rate that they must pay for each unit of labor.
B) decrease the marginal revenue product of labor.
C) increase the marginal revenue product of labor.
D) move upward along their downward sloping marginal product of labor curve.
51) The effects of the national health care program on labor markets will
A) increase the quantity supplied of labor.
B) decrease the quantity supplied of labor.
C) increase the quantity demanded for labor.
D) decrease the quantity demanded for labor.
52) The effects of the national health care program on goods and services markets will
A) increase the marginal cost of the firm.
B) increase the quantity produced of the firm.
C) consumers will pay lower prices for many goods and services.
D) decrease the quantity demanded for all goods and services.
53) Based on most observations, what are the effects on government budgets from the national
health care program?
A) Tax revenues will not flow into the new program immediately.
B) The federal government ultimately will have to search for ways to reduce its health care
expenditures .
C) Federal government expenditures on the program are being phased in immediately.
D) the federal government ultimately will lower taxes since the program s cost will decline
over time.
54) Why have health care costs risen so much in recent years?
55) It is difficult to compare over time health care expenditures, costs, and output. Do you agree or
disagree? Why?
56) How is moral hazard related to health care?
