Deck 24: Health Care

Question 1

Some employers have reacted to rising health care costs by hiring more part-time and temporary workers.

Answer 1

False

Question 2

Technological progress in the health care industry has typically reduced costs and increased supply.

Answer 2

False

Question 3

Since 1960, health care costs in the United States have risen absolutely but remained constant as a percentage of gross domestic product.

Answer 3

True

Question 4

The Patient Protection and Affordable Care Act prohibits insurance companies from denying coverage to anyone on the basis of a preexisting medical condition.

Question 5

There is a consensus among economists that the amount of resources allocated to the health care industry is optimal.

Question 6

About three-fourths of all health care costs are paid out of pocket by patients.

Question 7

Asymmetric information in the health care market has increased the supply of health care.

Question 8

The health care industry includes the manufacture and sale of low-fat food.

Question 9

The demand for health care is highly elastic with respect to both price and income.

Question 10

Preferred provider organizations (PPOs)are a type of managed-care organization.

Question 11

In 2017, some 29 million Americans did not have health insurance.

Question 12

The Patient Protection and Affordable Care Act requires all firms to purchase health insurance for their employees or pay a $2,000 fine.

Question 13

Changes in the average age of the U.S. population over the past decade have decreased the demand for health care.

Question 14

Insurance companies use deductibles and copayments to control increases in the amount of health care demanded.

Question 15

Rising health care costs have prompted workers to change jobs with greater frequency.

Question 16

The federal government in 2006 enacted limits on "pain and suffering" awards on medical malpractice lawsuits against physicians.

Question 17

The health care industry currently absorbs about 17.9 percent of U.S. gross domestic product.

Question 18

Because employer payments for health insurance are not subject to income or payroll taxes, government in effect provides a subsidy to health care.

Question 19

A moral hazard problem arises in the health care market because health insurance encourages people to overconsume health care.

Question 20

Because of health insurance, resources are underallocated to the health care industry.

Question 21

The asymmetric information problem in health care implies that the demand for health care is a "supplier-induced demand."

Question 22

Raising deductibles and copayments in health insurance plans is one effective way to contain health care costs.

Question 23

The prominence of employer-provided health insurance in the U.S. is one major cause of the overconsumption and rapidly rising costs of health care in the country.

Question 24

Health care expenditures as a percentage of GDP are lower in the United States than in Germany, France, or Canada.

Question 25

The twin problems of health care in the U.S. are the rapidly rising cost of health care and limited access to health insurance coverage.

Question 26

The recently enacted health care reform package (the Patient Protection and Affordable Care Act)focuses solely on controlling health care costs.

Question 27

Health insurance induces consumers to adopt less prevention and overconsumption of health care.

Question 28

U.S. hospitals provide a significant amount of uncompensated, or "free," health care every year to the uninsured poor who are rushed in for emergency or critical care.

Question 29

The provision of health insurance leads to a deadweight loss due to an overallocation of resources to health care.

Question 30

Rising health care costs have contributed to slower growth in real wages of workers.

Question 31

Employers in the U.S. started offering health insurance as a fringe benefit to their employees during World War II as a way of getting around the wage controls that were in effect then.

Question 32

Medicare is the nationwide federal health care program available to Social Security beneficiaries and the disabled.

Question 33

Some low-income workers are not covered by Medicaid because of the income that they are earning from their jobs.

Question 34

The moral hazard problem created by health insurance induces consumers to underconsume health care.

Question 35

Most industrialized countries emphasize private health insurance paid by employers, to provide coverage for most workers in each nation.

Question 36

"Defensive medicine" means the same thing as "preventive medicine."

Question 37

The increasing use of part-time and temporary workers can partly be blamed on the rising health care costs to employers.

Question 38

The fee-for-service arrangement for paying doctors is one way to reduce health care costs.

Question 39

Managed-care organizations attempt to control their enrolled members' use of health care as a way of containing costs.

Question 40

In recent decades, health care expenditures in the U.S. have been rising in absolute terms, but falling as a percentage of GDP.

Question 41

Health savings accounts enable individuals who have high-deductible private insurance to place tax-free dollars into special accounts that can be used to pay for medical expenses.

Question 42

Approximately how many workers are employed in the U.S. health care industry?

A)$1,125.
B)$20,000.
C)$40,000.
D)$100.

Question 43

The table shows the hypothetical demand and supply schedule for health care. If private insurance covers 50 percent of the equilibrium price, how much will the insured pay and what will be their quantity of health care demanded?

A)$600 and 300 units.
B)$400 and 400 units.
C)$400 and 500 units.
D)$500 and 400 units.

Question 44

The table shows the hypothetical demand and supply schedule for health care. If there was no health insurance, the equilibrium price and quantity of health care would be

A)2 percent increase in the amount of health care demanded.
B)5 percent increase in the amount of health care demanded.
C)10 percent increase in the amount of health care demanded.
D)20 percent increase in the amount of health care demanded.

Question 45

Employer-provided private health insurance

A)162
B)224
C)580
D)6,200

Question 46

The table gives supply and demand data for a certain elective surgical procedure. If suppliers provide the quantity of health care demanded and insurance pays one-third of the remaining equilibrium price after a $1,000 deductible is satisfied, the quantity of health care demanded will be

A)$2,000 and 5,200.
B)$2,000 and 4,000.
C)$1,000 and 5,200.
D)$1,000 and 1,000.

Question 47

The table gives supply and demand data for a certain elective surgical procedure. Without health insurance, the equilibrium price and quantity would be

Question 48

The table gives supply and demand data for a certain elective surgical procedure. If suppliers provide the quantity of health care demanded and insurance pays one-third of the equilibrium price, there would be a resulting allocative

A)$400 and 500 units.
B)$400 and 400 units.
C)$500 and 400 units.
D)$200 and 700 units.

Question 49

Aside from new taxes, the Patient Protection and Affordable Care Act (PPACA)aims to generate revenue by enforcing a personal mandate that requires all individuals not covered by employer- or government-provided health insurance to purchase insurance.

Question 50

The Patient Protection and Affordable Care Act (PPACA)sets up so-called insurance exchanges where consumers can compare various insurance policies that meet certain government-set standards.

Question 51

The table shows the hypothetical demand and supply schedule for health care. The efficiency loss caused by the availability of health insurance paying 25 percent of the cost is

A)efficiency because, at 7,000 units, the marginal cost to society of $3,000 equals the marginal benefit of $3,000.
B)efficiency because, at 12,000 units, the marginal cost to society is $4,000 and the marginal benefit is $1,000.
C)inefficiency because, at 12,000 units, the marginal cost to society is $5,000 and the marginal benefit is $2,000.
D)inefficiency because, at 12,000 units, the marginal cost to society is $2,000 and the marginal benefit is $5,000.

Question 52

The price elasticity of demand for health care is 0.2. This means that a 5 percent increase in price will induce a

A)10,000.
B)16,000.
C)13,000.
D)20,000.

Question 53

One way that the Patient Protection and Affordable Care Act (PPACA)hopes to foster competition among health insurance companies is through so-called insurance exchanges.

Question 54

Studies in industrially advanced nations indicate that a 10 percent increase in incomes will generate a

A)10 percent decrease in quantity demanded.
B)5 percent decrease in quantity demanded.
C)2.5 percent decrease in quantity demanded.
D)1 percent decrease in quantity demanded.

Question 55

The main focus of the Patient Protection and Affordable Care Act (PPACA)is the provision of health insurance coverage to all Americans.

Question 56

The Patient Protection and Affordable Care Act (PPACA)bans the previous practice of insurance companies to deny coverage based on preexisting conditions.

Question 57

The table gives supply and demand data for a certain elective surgical procedure. If suppliers provide the quantity of health care demanded and insurance pays one-half of the equilibrium price, the immediate price to the consumer and quantity of health care demanded would be

A)$2,000 and 700.
B)$3,000 and 7,000.
C)$1,000 and 1,000.
D)$2,000 and 4,000.

Question 58

In the United States, approximately how many doctors are there per 100,000 population?

A)713,800
B)931,200
C)12 million
D)20 million

Question 59

Health maintenance organizations (HMOs)are like health clubs that operate facilities where people can exercise and get physical training.

Question 60

One of the taxes included in the Patient Protection and Affordable Care Act (PPACA)to generate revenue is a tax on junk food.

Question 61

In 2007, approximately what percentage of people in the United States with private health insurance received it as an employer-provided benefit?

A)is unique to the United States and not typically found in other countries.
B)is the most common form of health care provision in industrialized countries.
C)substantially reduces the cost of health care provision relative to national health insurance schemes.
D)provides a small percentage of health care spending in the United States.

Question 62

The twin problems of the U.S. health care industry are

A)incentives that encourage the overuse of health care.
B)incentives that discourage the use of health care, and overall poorer health.
C)lower costs of health care as providers better achieve economies of scale.
D)comprehensive coverage of the U.S. population, with few lacking access to adequate health care.

Question 63

Employer-provided private health insurance began in the United States because

A)35
B)50
C)88
D)95

Question 64

Roughly what portion of U.S. total health spending is paid for by private and public insurance?

A)risen absolutely but declined as a percentage of GDP.
B)declined absolutely but risen as a percentage of GDP.
C)risen absolutely and as a percentage of GDP.
D)declined absolutely and as a percentage of GDP.

Question 65

Which of the following statements is correct?

A)forced the growth of wages to keep pace.
B)encouraged outsourcing.
C)caused some employers to use more part-time and temporary workers.
D)done all of these.

Question 66

Rapidly rising U.S. health care costs have

A)one-tenth
B)one-fourth
C)four-fifths
D)one-half

Question 67

Approximately how many millions of Americans did not have health insurance coverage in 2017?

A)Costs have risen because increases in the price of health care have more than offset reductions in the quantity of health care provided.
B)Costs have risen because increases in the quantity of care provided have more than offset price reductions realized through economies of scale.
C)Costs have risen because both the price of health care and the quantity provided have risen.
D)Costs have remained relatively stable as price increases have been largely offset by reductions in the quantity provided.

Question 68

The United States devotes about ______ percent of its gross domestic product to health care (2017).

A)5.2 percent of domestic output (GDP).
B)13.1 percent of domestic output (GDP).
C)17.9 percent of domestic output (GDP).
D)21 percent of domestic output (GDP).

Question 69

As a percentage of GDP, health care spending in the United States has

A)provide health care services to the aged.
B)provide health care services to those receiving public assistance.
C)contain rising health care costs.
D)make a basic health care package available to all Americans.

Question 70

In the past several decades, U.S. health care expenditures have

A)$3.0 trillion.
B)$1.6 trillion.
C)$3.5 trillion.
D)$4.1 trillion.

Question 71

When the United States is described as having a dual system of health care, this means that

A)9
B)29
C)49
D)63

Question 72

Employer-provided private health insurance in the United States has resulted in

A)the rising threat of socialism prompted U.S. companies to provide insurance to dampen enthusiasm for socialist reform.
B)during World War II, wage and price controls forced employers to use nonwage forms of compensation to attract workers.
C)poor health conditions at the beginning of the 20th century prompted the U.S. government to require new companies to offer health insurance to employees.
D)the American Medical Association successfully lobbied the U.S. government to provide subsidies to companies offering private health insurance to employees.

Question 73

Which of the following statements is true about health care costs in the United States?

A)remained relatively unchanged in recent years.
B)risen slower than the overall price level.
C)risen at the same pace as the overall price level.
D)risen faster than the overall price level.

Question 74

Total U.S. health care spending in 2017 was approximately

A)higher than that for Germany and Japan but lower than that of the United Kingdom and Sweden.
B)higher than for any other major industrial country.
C)lower than that for Canada.
D)nearly identical to that of the other major industrial nations.

Question 75

The major objective of Medicaid is to

A)provide health care services to people on Social Security.
B)provide health care services to those receiving public assistance.
C)contain rising health care costs.
D)make a basic health care package available to all Americans.

Question 76

As a percentage of GDP, U.S. health care spending is

A)more than tripled.
B)more than quadrupled.
C)declined by one-half.
D)remained relatively constant.

Question 77

Between 1960 and 2017, U.S. health care spending as a percentage of domestic output

A)5.2
B)8.6
C)15.3
D)17.9

Question 78

The price of medical care in the United States has

A)rapidly rising costs and unequal access to health care.
B)declining quality of health care and the duplication of specialized equipment at hospitals.
C)declining per capita spending on health care and the moral hazard problem.
D)the decline in the number of family physicians and the failure to vaccinate children.

Question 79

The major purpose of Medicare is to

A)government provides basic health insurance for all Americans and private insurance covers services beyond the basic level.
B)high-quality care is provided in urban areas, but care in rural areas is of poor quality.
C)those Americans with good insurance or substantial wealth receive world-class health care, while those without insurance receive no or low-quality health care.
D)the high-risk segment of the population is required to have health insurance, while the low-risk sector is not.

Question 80

Aggregate U.S. health care spending in 2017 was approximately

A)decreased substantially since 1960.
B)increased slightly since 1960.
C)increased substantially since 1960.
D)remained relatively constant since 1960.