Deck 18: Value for Money in the Future of Health Care

Question 1

One of the key contributions health economists make to any debate on medical care decisions is to force the questions which make clear the perspectives of each party involved: patient, provider, or payer.

Answer 1

True

Question 2

Health economists view all incentives as monetary in tracing the money trail in a medical decision.

Answer 2

False

Question 3

Economists explain the continuous increases in health expenditures in the U.S. as primarily a function of the high costs of medical interventions.

Answer 3

False

Question 4

Dynamic efficiency means that some short term allocative efficiency must be traded off to give time for managers, physicians, and other employees to create technological improvements that might only be allocatively efficient many years in the future.

Question 5

If the incremental cost of a $40,000 medical treatment results in an expected gain of 12 years of life, then the treatment is economically efficient.

Question 6

Path dependence is the sociologist's way of saying that it is unlikely that the changes to the U.S. system will be made which totally do away with providers already in the system. For example, it is unlikely that private physician practices will be done away with in favor of a more efficient system where physicians give up their ownership to government or hospital offered employment.

Question 7

Economics is the science which studies how scarce resources are allocated among unlimited needs and wants. In health economics, the term "allocation" can be restated as "distribution": the distribution of resources, the distribution of health, the distribution of medical care, and the distribution of provider incomes.

Question 8

Physician office management solutions to reducing the escalating growth rates of health expenditures and improving patient satisfaction include MSAs, medical homes and concierge practices.

Question 9

Rising costs and declining consumer satisfaction are among the key factors that may lead us to define the system as broken.

Question 10

Marginal productivity (gain in average life expectancy) of an additional dollar spent on medical care is much higher today than it was a century ago.

Question 11

Administrative costs in the US healthcare sector tend to be lower than in other developed countries due to a higher degree of competition in healthcare markets.

Question 12

The role of the physician in the 21^st century compared with her role in the early and mid 20^th century will be a switch from expert and sole decision maker to that of team leader.

Question 13

Reducing healthcare spending in the U.S. by 20% is likely to result in a

A) decline in the nation's average life expectancy by approximately 20% too.
B) decline in the nation's average life expectancy by more than 20%.
C) decline in the nation's average life expectancy by approximately 10%.
D) barely noticeable decrease in the nation's life expectancy.
E) significant opposition from health economists.

Question 14

Common reference values for a year of life worth are usually in the range between ____________________ per additional year.

A) $10,000 to $20,000
B) $20,000 to $30,000
C) $30,000 to $35,000
D) $75,000 to $375,000
E) $400,000 to $600,000

Question 15

According to the 2001 study by Cutler and McClellan, what kind of treatment is likely to cost more than it is really worth?

A) heart attack
B) low birth weight
C) depression
D) cataracts
E) breast cancer

Question 16

Which of the following is not an example of inefficiencies in the US medical sector caused by the system's slow response to technological and organizational changes in the rest of the economy since the 1970s?

A) Separate coverage of inpatient and outpatient care by Medicare Part A and Part B respectively.
B) Relatively low rate of adoption of electronic medical records.
C) Relatively low number of interdisciplinary teams of healthcare professionals working together, compared to the number of solo practitioners.
D) Management practices steeped in long-standing traditions.
E) Inability of the medical sector to go through the "creative destruction" cycles relatively smoothly.

Question 17

Some of the important and long-standing institutions of the American healthcare system, that are not likely to disappear in the near future as a result of reforms, include all of the following except

A) private employer-based health insurance.
B) FSA contributions.
C) insurance plans with a long history (e.g. Blue Cross and Blue Shield).
D) nonprofit hospitals.
E) Medicare.

Question 18

What seems to be Dr. Getzen's overall conclusion about the likelihood of implementing efficiency-boosting reforms in the healthcare sector in the nearest future?

A) The state of the healthcare industry is so "broken", that sweeping reforms are necessary, inevitable and public is ready for them.
B) Since the escalating healthcare costs have become truly unsustainable, the public's willingness to give up some of the latest technological advances in return for making adequate healthcare available for all is now evident.
C) The necessity to adopt modern management principles and IT infrastructure is now widely understood among the US medical professionals, who are willing to collectively finance these expensive initiatives.
D) Americans seem to have very specific perceptions about the possible tradeoffs between the quality, cost and access to medical care, which prevent them from approving any radical changes in the healthcare system.
E) It is likely that the United State will eventually adopt an approach similar to England's postwar reforms which led to the creation of National Health System.

Question 19

When projecting future US healthcare spending as a share of GDP into the long-run, it is likely that

A) it will take the shape of a U-curve.
B) it will take the shape of an inverted U-curve.
C) it will take the shape of a S-curve.
D) its positive slope with be becoming steeper over time.
E) there will be no stable pattern in its shape because of the upcoming reforms and uncertainty associated with them.

Question 20

Discuss the long term trend in income and average health expenditures in the U.S. which led to the distributional crisis in health care costs beginning in the 1950s.

Question 21

Dr. Getzen remarks that care and information management will likely become more important than production and treatments in medical care. What characteristics of the U.S. population lend support to this statement?

Question 22

Comment on the following statement. The net effect of all these changes will on balance be beneficial, yet most are apt to be painful and resisted by some constituency.

Question 23

Comment on the expected trends in the magnitude of the health expenditures growth rates in the very long run.

Question 24

Use the concept of path dependence, as well as U.S. cultural values, to explain why private physicians will lobby strongly against changes to the way they operate their practices or are paid.

Question 25

Suppose health economists are able to quantify the costs and expected benefits to suppliers and consumers of establishing a methadone treatment center for drug addicts in a particular neighborhood. What is the limit to economic analysis in informing the community debate?

Question 26

"Follow the money." Please explain how this illuminates the basic economic question in health economics: What gets produced? How? And for whom?

Question 27

Behavioral economics studies the decision making by individuals which may or may not conform to neoclassical economic theory of individuals as rational utility maximizers. Other applications of behavioral economics apply to financial decision making. Cass Sunstein and Richard Thaler are known for their work in the use of defaults in pension plans. They show that placing employees in a voluntary savings plan and giving them the option to opt out results in higher savings rates than offering employees pension savings plans and not placing them in a default savings plan. Thus, a nudge to a more socially efficient outcome is employed. How might this nudge be applied to employee health insurance plan choice?

Question 28

Why would it be misleading for advertisements to urge the general population to get a popular flu vaccine so that everybody contributes to a healthy U.S.? That is, why would it be misleading to present a vaccine as "producing health"?

Question 29

Why might it be difficult to convince a breast cancer research group at a particular institution to give up a portion of its funding for a long term research project because it would be more economically efficient to use those same funds on another research project which is highly likely to lead to a reduction in childhood cancer mortality rates within a few months?

Question 30

Assume a patient has a rare disease. The only known option for treatment at this stage of the disease is an experimental drug which costs $200,000 and has been clinically proven to provide a life expectancy gain of 2 months. Why would the patient's insurance company be likely to deny the pre-certification for the treatment? Why would it be difficult to convince a patient's family that a third round of an experimental treatment might only add at most two months of life expectancy at a cost of $200,000 and would not be economically efficient?