Econ 450: Final Exam – Flashcards

FALSE; In his paper, Ken Arrow proved that societies do not necessarily have transitive preferences, even when all its members do. His finding is known as Arrows Impossibility Theorem.

FALSE; In an ideal world, all three goals would be attainable at once, but in practice, it is impossible to have everything. Any attempt by a nation to move closer to one of these three goals necessarily involves a tradeoff that moves that nation further away from some other goal.

FALSE; Private insurance markets often result in some uninsurance, which can leave some members of society without affordable access to health care if they are diagnosed with cancer or diabetes for instance. Conversely, universal public insurance does further the goal of equity.

FALSE; A mandate, which is a legal requirement that everyone in a population purchase an insurance contract, confronts adverse selection by effectively banning it. Even robust customers who would prefer to opt out are legally required to buy into the system.

TRUE; Cost-sharing (such as the use of deductibles, coinsurance, and copayments) controls moral hazard in a way that is sometimes more politically palatable than CEA (cost-effectiveness analysis). But it also makes health care less accessible for patients.

TRUE; The hassle of waiting in line constitutes a non-financial cost that all patients "pay" when they want care. Therefore queues can replace financial cost-sharing arrangements as a way to limit moral hazard. A queue-based system may also be more equitable than a cost-sharing one if it means that rich or poor alike must wait in the same line for care.

FALSE; The shift towards prospective payment systems has turned some doctor-patient relationships adversarial by making health care providers partly responsible for containing costs. This introduces a note of distrust - patients now have to worry that their doctors might prioritize reducing costs over improving their patients' health.

FALSE; Too much competition can be a problem in hospital markets due to information asymmetries between doctors and patients, and the ubiquity of insurance. Too much competition can exacerbate inefficient quality competition, lead to a medical arms race, and drastically increase the costs of health care.

TRUE; A country that is below its own health production frontier is said to be productively inefficient since it could spend less on health care and achieve the same health outcomes, or spend the same on health care and achieve better health outcomes.

FALSE; It is possible, for example, that the marginal dollar spend on education or parks produces more utility for the population that the marginal dollar spent on health care. Such a country is said to be allocatively inefficient since it spends to much on health care relative to other productive activities. Since the country is on its health production frontier, shifting money to other activities will reduce health, but increase the overall welfare of the population. The opposite is also possible - the country on its health production frontier spends too little on health care and too much on other activities.

FALSE; Countries whose subpopulations vary widely in income levels or in their preferences for unhealthy habits may appear to be productively inefficient on average, even though each individual subpopulation within the country is on the health production frontier.

TRUE; Universal insurance is paid for through national taxes (progressive taxation) which ensure that anyone may be treated by a doctor without any direct costs to themselves. Exceptions include eye and dental care.

TRUE; "Single-payer insurance" is term for systems where the government provides everyone with health insurance and pays for almost all medical bills.

TRUE; Doctors in most other Beveridge nations, including the UK, are considered public employees rather than private contractors.

FALSE; Queues may help limit moral hazard and can reduce labor expenses by necessitating fewer doctors.

TRUE; High prices discourage those with the least need for treatment from waiting in line. Price rationing also deters low-income patients who would benefit immensely from treatment but who cannot afford to pay the marginal costs from price rationing.

FALSE; Generally, patients must get a referral from a general practitioner before they may enter a queue to see a specialist. This practice is known as "gatekeeping."

FALSE; NICE assessments are used to determine which treatments are not sufficiently cost-effective. Any treatment or drug that does not pass the test is not covered by NHS.

TRUE; Historically, the "postcode lottery" determined which hospitals and doctors patients could see depending on where they lived. Since the early 2000s, patients have been able to choose to see any GP they want.

TRUE; Such negotiations were meant to help make hospitals cheaper and more efficient.

FALSE; 17% of health expenditures are privately financed via private copayments. These include dental costs, pharmaceutical costs, and payments to luxury hospitals.

FALSE; Private insurance exists in every Beveridge country.

FALSE; Sickness funds in a Bismarck model are private, non-profit entities.

TRUE; Bismarck countries have around a 11% average health care expenditure as a percentage of GDP, while Beveridge countries are around 9.5%.

FALSE; Supplemental insurance and private insurance is offered to individuals who are willing to pay for it.

TRUE; Managed competition is one of the defining aspects of the Bismarck model.

Bismarck countries are continually making policies to combat risk selection - hard to rid of.

FALSE; Even though many countries have government controlled prices, physicians can still lobby and negotiate with public entities each year to determine medical prices for each year.

TRUE; One distinction between France and other Bismarck countries is that patients pay all costs upfront and then are reimbursed by their insurance fund. This helps ensure patient choice and physician autonomy.

TRUE; Uniform prices for care throughout the country helps control costs each year from skyrocketing.

FALSE; Although there are countries with over a hundred sickness funds, Israel has only four. It is true that Beveridge countries typically only have a single national plan.

TRUE; Individuals pay a percentage of their income to finance sickness funds.

TRUE; Patients in Bismarck tend to use more medical technology than those in Beveridge countries.

FALSE; Insurance is required of all citizens. Individuals may only opt out of public insurance if they buy private insurance as a replacement.

FALSE; There are fewers queues in the Bismarck model because there are cost controls that Beveridge patients do not have to worry about (i.e. some copayments)

FALSE; Israel and Switzerland have only had their universal insurance systems since the 1990s.

TRUE; If patients do not like care given by one provider, they are free to see a different one.

FALSE; Sickness funds are prohibited from charging premiums based on risk rating. Instead they can charge community rated plans.

TRUE; The Institute for Quality and Efficiency in Health Care is able to use cost-effectiveness on new medical technologies to advise firms. However, they do not conduct analyses themselves, not do they have the authority to enforce their findings on a national level, but their findings can help inform sickness funds of procedures that may or may not be cost-effective.

TRUE; This is mostly a consequence of the creation of Medicare and Medicaid in the 1960s.

FALSE; More and more US employers are offering peripheral, part-time jobs without health insurance, and this is explaining rising uninsurance.

FALSE; While it is nominally true that many employers pay a portion of health insurance premiums for their workers, in equilibrium the wages of workers reflect the employer subsidy. It is more accurate to say that workers pay for their employer-sponsored health insurance plans, both through assessed premiums and through lower wages.

TRUE; Parts A, B, and C and concerned with hospital and outpatient coverage, not drug coverage.

TRUE; Medicare must pay for any treatment that is "safe, effective, non-investigational, and appropriate" - cost is not taken into account.

FALSE; the primary source of funding is from payroll taxes on the employed population, most of whom are under age 65 and not on Medicare.

FALSE; This law actually depressed the wages of female workers of childbearing age. This is evidence of WAGE PASS-THROUGH.

FALSE; Many employers are still providing coverage, but there has been an increase in "peripheral" jobs - like part-time jobs or temp jobs - that are not eligible for coverage.

TRUE; If managed care tactics effectively combat moral hazard, they can increase consumer welfare because there is less wasteful care for consumers to finance.

FALSE; In a survey of 17 academic institutions, it was found that managed care experts were significantly less likely to enroll in an HMO than philosophers, mathematicians, and law professors.

TRUE; The disincentive effect applies to anyone who is at risk of losing Medicaid if they start working more.

FALSE; The disincentive effect applies to anyone who is at risk of losing Medicaid if they start working more. Someone earning $9,999 per year has a major disincentive to take on more work.

FALSE; Medicaid is designed to be FREE or nearly free for its patients so it is almost entirely financed by taxpayers.

TRUE; sixty million people lacked health insurance for at least some part of the year.

TRUE; However, the law does not specify how or where Medicare cuts will occur.

FALSE; There will still be 20 million people without health insurance, including people who opt out of buying insurance through a health insurance exchange.

FALSE; In order for a population to maintain its size from generation to generation, each woman must give birth to about 2.1 children over her lifetime. This special fertility rate is often called the population replacement fertility rate. In the last few decades, the total fertility rate in the developed world has fallen below that level. Higher fertility rates in developing countries are actually slowing the aging of the world population.

FALSE; Japan is one of the starkest examples of a population rapidly going gray. Indeed, the proportion of elderly in the Japanese population will increase at a far faster rate than in any other industrialized nation. Projections indicate that 27.3 percent of the Japanese population will be over 65 by 2025, one of the highest rates in the developed world.

TRUE; Many of these health systems are predicated on a bedrock assumption of population growth, which seemed reasonable up until the last few decades. However the twin forces of rising life expectancy and declining birthrates will bankrupt these programs unless they are reformed.

FALSE; in 2007, Medicare Part A expenditures exceeded payroll tax collections for the first time, and the Medicare Trust Fund has been on the decline since then.

FALSE; This finding is evidence AGAINST compression of morbidity, which occurs when disability and illness are delayed until later in life.

TRUE; The inevitable rise in morality from other causes that results from a reduction in mortality from any one particular cause in known as the competing risks problem.

FALSE; For example, overall health care expenditures might rise as a consequence of a new magical cancer treatment, even if the treatment itself is basically costless. This might occur it the costs of caring for heart attacks and other competing risks are more expensive than caring for cancer.

FALSE; Some end-of-life health care is wasteful or even prolongs the pain of a dying patient, but in many cases, disproportionate spending on EOL care is clinically justifiable, as in the case of emergency surgery for patients with badly clogged arteries or chemotherapy capable of arresting the spread of a cancer.

FALSE; An advance directive is a binding legal document that indicates a patient's wishes regarding EOL care. The patient can specifically indicate instructions for situations in which he can no longer communicate.

FALSE; Natalist policies have enjoyed limited success in France and Sweden, but most European countries still have very low birth rates.