Chapter 35

1. The two major problems facing the health care system of the United States are
A.the formation of health alliances and preferred provider organizations
B.a decline in innovation and the rate of technological changes
C.increasing supply and decreasing demand for health care
D.access to health care and rapidly increasing costs


2. The health care industry employs about how many physicians?
A.50,000
B.100,000
C.600,000
D.1 million


3.
R-1 35a

What was total spending as a percentage of GDP in 1965 and in 1995?
A.1.4
B.2.6
C.6.12
D.9.18



4. The contradiction about health care in the United States is that its
A.medical care is the best in the world, but the nation ranks low on many health indicators
B.expenditures for health care are modest, but medical care is the best in the world
C.expenditures for health care are the highest in the world, but the quality of medical care is the worst of all industrial nations
D.advances in medicine have fallen at a time when its need for better medicine has risen


5. Which is a labor market effect from rapidly rising health care costs?
A.a decrease in the number of health care workers
B.an increase in the rate of growth of real wages
C.an increase in the use of part-time workers
D.a decrease in the mobility of the labor force


6. Which person is most likely to be uninsured or ineligible for health insurance?
A.a college professor working at a state university
B.a part-time worker at a manufacturing plant
C.an accountant employed by a large corporation
D.a person who qualifies for Aid to Families with Dependent Children (AFDC)


7. Which would be considered a peculiarity of the market for health care?
A.third-party payments
B.employer mandates
C.tax credits and vouchers
D.fee-for-service payments


8. The demand for health care is
A.price elastic
B.price inelastic
C.income elastic
D.income inelastic


9. From an income perspective, health care is considered
A.an inferior good
B.a normal good
C.a superior good
D.a supply-induced good


10. Which is a demand factor in the market for health care?
A.asymmetric information
B.advance in new medical technology
C.slow productivity growth in the health care industry
D.the number of physicians graduating from medical school


11. Asymmetric information causes problems in the health care market because
A.the buyer, not the supplier of health care services, makes most of the decisions about the amount and type of health care to be provided
B.the supplier, not the buyer of the health care services, makes most of the decisions about the amount and type of health care to be provided
C.government has less information than the health care providers and can inflate fees
D.insurance companies, not the health care consumer, control deductibles and copayment policies


12. Which is a supply factor in the health care market?
A.medical technology
B.an aging population
C.defensive medicine
D.growing incomes


13. Unhealthy lifestyles may be encouraged by medical insurance because people figure that health insurance will cover illnesses or accidents. This attitude is characteristic of
A.asymmetric information
B.the play-or-pay problem
C.a moral hazard problem
D.a reduced access problem


14.
R-2 35b

If there was no health insurance, the equilibrium price and quantity of health care would be
A.P1 and Q2
B.P2 and Q1
C.P2 and Q2
D.P3 and Q3



15.
R-2 35b

Assume that health insurance pays half the cost of health care. For the consumer, the price and quantity of health care
consumed would be
A.P1 and Q2
B.P2 and Q2
C.P2 and Q1
D.P3 and Q3



16.
R-2 35b

With health insurance paying half the cost of health care, there is allocative
A.efficiency because at Q1 the marginal cost to society equals the marginal benefit
B.efficiency because at Q2 the marginal cost to society is less than the marginal benefit by the difference between points b and d
C.inefficiency because at Q2 the marginal cost to society exceeds the marginal benefit by the difference between points b and d
D.inefficiency because at Q3 the marginal cost to society exceeds the marginal benefit by the difference between points a and e



17.
R-2 35b

The efficiency loss caused by the availability of health insurance is shown by area
A.Q1caQ3
B.Q1cbQ2
C.cae
D.cbd



18. Most experts attribute a major portion of the relative rise in health care spending to
A.rising incomes
B.an aging population
C.advances in medical technology
D.an increase in the number of physicians


19. The play-or-pay proposal for health care reform is intended to
A.increase access to health care through the use of tax credits and vouchers as part of a national health insurance system
B.expand health care coverage by requiring all employers to offer a health insurance program for workers or pay a special payroll tax for health care
C.make states become a bigger player in health care reform by having the Federal government match state expenditures for health care and Medicaid
D.reduce consumption of health care by increasing deductibles and copayments for health insurance


20. Which is primarily designed to increase access to health care rather than contain costs?
A.national health insurance
B.diagnosis-related-group system
C.health maintenance organizations
D.preferred provider organizations


21. A substantive criticism of national health insurance is that
A.the Federal government provision of tax credits and vouchers for health care would be inefficient
B.it establishes a diagnosis-related-group system for the payments of health provider services that is unnecessary and inefficient
C.it increases deductibles and copayments that are borne by individuals, making health care more costly
D.the Federal government does not have a good record of containing the costs of health care programs


22. Insurance companies often have policies that require the insured to pay the fixed portion (e.g., $500) of each year's health cost and a fixed percentage (e.g., 20%) of all additional costs. The expenditures by the insured are
A.credits and vouchers
B.deductibles and copayments
C.fee-for-service payments
D.diagnosis-related-group expenditures


23. An organization that requires hospitals and physicians to provide discounted prices for their services as a condition for inclusion in the insurance plan is a
A.health maintenance organization
B.preferred provider organization
C.fee-for-service organization
D.health alliance


24. The Health Security Act of the Clinton administration that was proposed in 1993 would have
A.expanded the use of the fee-for-payment system
B.made the participation of the employer voluntary
C.used health alliances to provide universal coverage
D.limited the number of preferred provider organizations


25. With medical savings accounts for small business owners, the self-employed, and the uninsured, consumers
A.make tax-deductible contributions to the accounts and then use the funds to pay for health care expenditures
B.contract with health maintenance organizations and use the accounts to get medical services at the lowest possible rate
C.obtain discounted prices for health care services that are provided by the diagnosis-related-group system
D.deposit money in a bank and receive a certificate of deposit that is indexed to the inflation rate for health care



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