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Microeconomics Quiz 7

The document contains 10 multiple choice questions about health care economics and policy. Question 1 asks about how giving patients incentives to consider prices could affect economic efficiency and costs. Question 2 asks about tax treatment of employer vs individually purchased health insurance. Question 3 asks how equalizing the tax treatment could affect consumer prices and other factors. Question 4 asks how repealing the tax preference could affect spending. Question 5 asks which reform could reduce spending without reducing care effectiveness. Questions 6-10 contain additional multiple choice questions about administrative costs, supply and demand effects of different insurance models, and relationships between compensation and insurance costs.

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157 views2 pages

Microeconomics Quiz 7

The document contains 10 multiple choice questions about health care economics and policy. Question 1 asks about how giving patients incentives to consider prices could affect economic efficiency and costs. Question 2 asks about tax treatment of employer vs individually purchased health insurance. Question 3 asks how equalizing the tax treatment could affect consumer prices and other factors. Question 4 asks how repealing the tax preference could affect spending. Question 5 asks which reform could reduce spending without reducing care effectiveness. Questions 6-10 contain additional multiple choice questions about administrative costs, supply and demand effects of different insurance models, and relationships between compensation and insurance costs.

Uploaded by

Kevin Jeremy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Write the letter pertaining to the best answer.

1) A goal of market-based reforms of the health care system is to give patients an incentive to pay more
attention to the prices of medical services. This would tend to ________ economic efficiency by ________
the costs of medical services
A) increase; increasing
B) increase; decreasing
C) decrease; increasing
D) decrease; decreasing

2) Most employees ________ pay taxes on the value of health insurance provided by employers, and most
people ________ get a tax break when buying individual health insurance policies.
A) do; do
B) do; do not
C) do not; do
D) do not; do not

3) Some economists have proposed making the tax treatment of employer-provided health insurance the
same as the tax treatment of individually purchased health insurance and out-of-pocket health care
spending. Such changes would make it more likely that
A) consumers would pay prices closer to the actual costs for routine medical care.
B) employers would provide more generous medical coverage to their employees.
C) insurance deductibles would decrease.
D) the quantity of medical services demanded would increase.

4) Economists John Cogan, Glenn Hubbard, and Daniel Kessler have estimated that repealing the tax
preference for employer-provided health insurance would
A) significantly reduce the effectiveness of the health care received by those enrolled in these programs.
B) increase overall spending on health care as consumers would have to pay a higher price for medical
services.
C) drive up prices for health care coverage since insurance reimbursements to doctors would be reduced.
D) reduce spending by people enrolled in these programs by 33 percent.

5) Which of the following reforms could potentially reduce spending on health care without reducing the
effectiveness of health care received?
A) nationalize health care so that all health services are government funded and operated
B) give every citizen a fixed amount of money that can only be spent on health care services
C) reimburse consumers for preventive health care expenditures so as to avoid costly emergency medical
treatments in the future
D) standardize the tax treatment of employer-based health insurance benefits and private spending on
health care

A report from the Center for American Progress states that administration costs for health care in the
United States are well above those in other high-income countries, accounting for 8.3 percent of
spending in the health care sector, compared to a global average of about 3 percent. According to the
report, average billing and insurance-related costs per patient encounter include $215 for inpatient
surgery, $62 for an emergency room visit, and $20 for a primary care visit. The report noted that a
structural overhaul of finance and pricing in the health care industry would greatly help in
eliminating excess administrative costs, but moving to a complete single-payer health care system is
not mandatory. According to the report, setting uniform rates where all health insurers pay the same
price for services would go a long way to reducing administrative costs.
Source: Sarah Kilff, "2 charts that show our health care administrative costs are really high," vox.com,
April 8, 2019.

6) Refer to the Article Summary. The article discusses the high administrative costs of health care in the
United States. Even if private insurance companies were more efficient and brought administrative costs
down by paying uniform rates, consumers would still pay less than the full cost of medical treatment.
This would result in the market equilibrium price of medical services being ________ than the efficient
equilibrium price, and the market equilibrium quantity of medical services being ________ than the
efficient equilibrium quantity.
A) greater; greater
B) greater; less
C) less; greater
D) less; less

7) Basic supply and demand analysis indicates that having firms rather than the government provide
health insurance to workers
A) changes both the composition of the compensation that firms pay and its level.
B) changes the composition of the compensation that firms pay, but does not change its level.
C) does not change the composition of the compensation that firms pay, but does change its level.
D) changes neither the composition of the compensation that firms pay nor its level.

8) For a given level of compensation, the ________ a firm pays for your health insurance, the ________ it
will pay you in wages.
A) more; more
B) less; less
C) less; more
D) Health insurance payments and wages are not related.

9) The rising cost of malpractice insurance is one of the leading causes of the increase in health care
spending as a percentage of GDP .

10) "Cost disease" refers to the tendency for low productivity in the service sector to lead to higher costs
in those industries.

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