question

3 main concerns about US health care system

answer

excessive costs, limited insurance coverage, fiscal strains that providing health care imposes on government

question

Health expenditures as a percentage of GDP are ___ in the US than any other country. In 2010 they were about __% of GDP. Health status is ___ in the US than many countries that spend less. Expenditures in the US are (decreasing or increasing?) due to what 2 things?

answer

higher -- 18 -- lower -- increasing -- increasing quantity of services and prices increasing faster than price level

question

When was the Patient Protection and Affordable Care Act begun?

answer

2010

question

Before the PPAC, ___ in ___ people were uninsured. Most of these people were typically...

answer

1 in 6; workers in low-paying jobs, part-time, or self-employed (because the wealthier could pay for it and the poor were on Medicaid

question

Emergency Medical Treatment and Labor Act (EMTALA)

answer

hospitals must provide emergency services regardless of ability to pay (individuals often delay getting treatment until it is an emergency thereby raising total costs of treatment)

question

Because those without coverage often do eventually get treatment (with the EMTALA), lack of coverage also results in ________

answer

cost shifting

question

Federal expenditures on Medicare and Medicaid accounted for ___% of GDP in 2010 and have been projected to almost ____ in the next 60 years

answer

5.5%; triple

question

From 2010 to 2012, health spending grew at a rate of ___%; much of this is attributed to ....

answer

1.1%; the signing of the PPACA

question

4 groups that most health care consumers fall into:

answer

1) The poor who receive care through Medicaid 2) The elderly who receive care through Medicare 3) Employed individuals who are covered by employer-provided insurance 4) The uninsured who sometime purchase care directly or receive uncompensated care

question

The share of insurance paid out-of-pocket by individuals has ____ to ___%, while third-party payments have ____ to ___%

answer

decreased; 14%; increased; 82%

question

US health expenditures are a ___ higher than the OECD average as a share of GDP, and are the _____ as a share of total gov expenditures. Out-of-pocket expenditures as a percentage of total health expenditures in the US are among the ____ of OECD countries

answer

3rd; highest; lowest

question

US ineffective outcomes and results of so much spending in healthcare could be attributable to 2 main things...

answer

1) lifestyle decisions 2) High levels of inequality

question

2 dominant forms of private insurance

answer

Fee-for-service plans and Managed Care

question

Private insurance plan where doctors are reimbursed on the basis of the service provided; involves deductibles and co-payments

answer

fee-for-service plans

question

the insurance company pays only an amount in excess of a certain level, called the _____

answer

deductible

question

The fraction of the excess over this deductible that the individual pays

answer

co-payment

question

Type of private insurance plan where a 3rd-party payer mediates between doctors and patients specifying what they will cover and negotiating fees for these services; (ie. HMOs)

answer

managed care

question

The most common managed care institution; oversees a system in which patients pays a capitation fee to cover medical costs, etc

answer

Health maintenance organization

question

a fixed annual amount that HMO's often charge to cover medical costs

answer

capitation fee

question

The larger of the 2 programs (Medicaid or Medicare?) that provides medical care for everyone over 65 and for certain disabled persons

answer

Medicare

question

3 components of Medicare

answer

hospital insurance, supplementary medical insurance (pays for doctor's services), and prescription drugs

question

Program that provides medical care for certain low-income families with dependent children, and for most poor aged, blind, and disabled persons

answer

Medicaid

question

Medicaid is administered by ____

answer

states

question

Service created to address important externalities associated with communicable diseases

answer

Public Health Service

question

Government medical program that provides medical care for those injured while serving in the armed forces and for other veterans

answer

VA hospitals

question

Medical research expenditures amounted to ___ in 2010

answer

$49 billion

question

Examples: employees do not have to pay taxes on the value of their employer-provided health benefits; medical expenses in excess of 10% of income are deductible from income

answer

Tax expenditures

question

2 concerns about tax expenditures

answer

Efficiency consequences (the excessive consumption of medical services that is induced) and equity

question

Changes to the tax code in 1980s....

answer

reduced marginal tax rates and increased the minimum expenditure required of tax deductibility of medical expenses

question

One of the objectives of the ____ was to undertake more assessments of the benefits and costs of different medical practices to help increase the efficiency of the health care system

answer

PPACA

question

Because so much of the medical expenditures are paid for by third parties, consumers...

answer

have little incentive to be cost conscious and the force of the price system is greatly diminished

question

Threats with fee-for-service:

answer

The more services a doctor recommends and provides, the higher the income. This leads to high levels of service; malpractice suits

question

Advantage and disadvantage of HMO:

answer

-Advantage: may resolve the problem of over-high levels of service with different incentives (like capitation fee) -Disadvantage: HMO incentives may lead to underprovision of services

question

Malpractice payments (are or are not?) a major factor driving either increases in insurance premiums or overall health care expenditures. The threat of malpractice lawsuits has contributed to...

answer

are not; increased expenditures on diagnostic procedures

question

Problems with insurance interact...

answer

lack of competition leads to higher profits, and the high profits provide the insurance companies with the resources and incentives to lobby Congress against many reforms that would increase the overall efficiency of the health care system

question

Because insurance is excessive...

answer

expenditures on health care are excessive because of the DWL created (see figure 13.4)

question

Individuals buy insurance because they are rick adverse. The result of a market economy in which individuals feel that premiums are too high to buy insurance is...

answer

that these individuals must bear the costs of the risks themselves

question

2 tactics that the PPACA bans:

answer

1) not providing insurance for pre-existing conditions 2)imposing limits on extent of coverage

question

The attempts by insurance companies to improve the mix of those covered are referred to as...

answer

cherry picking or cream skimming

question

Problem with increasing profits by cream skimming

answer

the gains to one firm occur largely at the expense of other firms, which find that they have a worse mix of insured individuals

question

Private health insurance companies spent an average of ___% on administrative expenses in 2010

answer

12%

question

By one estimate, __% of expenditures on hospitals actually goes to administrative costs

answer

20%

question

Most economists believe that insurance markets should focus on..

answer

large losses (those that the individual would find difficult to bear)

question

Although hospital stays are relatively infrequent and short in the US when compared with other OECD countries, hospital spending per discharge is almost ___the OECD median

answer

triple

question

The view that there are goods and services like health care, whose availability to different individuals should not depend solely on their income is known as...

answer

specific egalitarianism

question

Economists look to ____ as the primary way in which costs can be contained

answer

improved incentives

question

The PPACA established individual mandate requires...

answer

most individuals to have health insurance or pay a penalty

question

System (practiced by Canada) where government pays medical bills; financed by taxes

answer

single payer system

question

When PPACA was enacted in 2010, approximately ___Americans did not have health insurance

answer

50 million

question

Under PPACA roughly ___ people are expected to gain coverage, and half of these will gain coverage through...

answer

30 million; expansion of Medicaid

question

The long-run fiscal strains arising from the health care system are largely the result of growing ____ expenditures

answer

Medicare

question

Medigap insurance

answer

insurance that covers most of the out-of-pocket costs within Medicare (co-payments and deductibles)

question

System where hospitals are reimbursed a fixed amount for the treatment of a particular illness

answer

diagnosis-related groups

question

an extension that includes all the treatments associated with an illness, both in hospital and out of hospital

answer

bundling

question

Program that enrolls recipients in privately owned Medicare; actually increased costs

answer

Medicare Advantage plan

question

Social welfare function

answer

gives the level of social welfare corresponding to a particular set of levels of utility attained by members of society; provides a basis for ranking any allocation of resources

question

The bulk of responsibility for education remains at...

answer

state and local levels

question

What 2 major economic issues have informed much of the recent concern about education in the US?

answer

a slowdown in productivity and increasing inequality

question

In 1995, the US was ranked ___ in math and ___ in science. By 2011 it was still ranked ___ in math and science

answer

28th, 17th, 9th

question

From 1945 to 1972, state percentage of education funds remained at ___%. During the mid-1970s, state expenditures began to _____ compared to local expenditures. Today _____ finance almost half of the cost of public elementary and secondary schools. Federal support ____ in the 1960s and 1970s. From the 1980s to 1990s, it _____ but has _____ in the past decade

answer

39%, increase, states, increased, decreased, increased

question

The study of collective decision processes and procedures

answer

Social choice theory

question

When there are more than 2 alternatives, how does majority voting work?

answer

voters choose among pairs of alternatives; society prefers an alternative if it beats each of them in pairwise competitions

question

The paradox of cyclical voting

answer

majority voting does not always aggregate transitive individual preferences into transitive social preference

question

Arrow's Impossibility Theorem

answer

The only voting rule with all of the 4 desirable properties is dictatorial; a non-dictorial voting rule require giving up at least one of these properties

question

The alternative that beats all the rest in pairwise comparisons (the outcome of majority voting)

answer

Condorcet winner

question

4 desirable voting properties

answer

1. Transitivity / completeness 2. Unanimity (if all individuals rank x before y then so should the voting rule) 3. Independence of Irrelevant Alternatives (social preference b/w x and y should depend on individuals' preference b/w x and y only) 4. Unrestricted Domain (must work no matter the set of preferences and alternatives)

question

Single peaked preferences guarantees...

answer

majority voting equilibrium

question

The outcome of majority voting corresponds to the preferences of the...

answer

median voter

question

Majority voting equilibrium (is or is not) pareto efficient

answer

is not

question

A social welfare function is some function of the individual utility functions which....

answer

increases when any individual's utility goes up and provides a way to rank allocations that only depend on individual preferences

question

Why are federal expenditures in Medicare and medicaid expected to triple? (3 reasons)

answer

aging of population, more services being used by the elderly, health car prices rising faster than inflation

question

In the first 9 months of 2016, ___ persons of all ages were uninsured at the time of the interview...that is ____fewer persons than in 2010 and ____ fewer persons in 2015

answer

28.2 million, 20.4 million, 0.4 million

question

Who is on Medicaid? Medicare?

answer

The poor are covered by medicaid. The elderly are covered by medicare.

question

In 2010, 16% of this uninsured were....

answer

full time workers or their dependents

question

What are the 2 primary reasons for Americans being uninsured?

answer

cost and job loss

question

Who are the most likely to be uninsured

answer

poor working families

question

Uninsured Americans cost the American healthcare system ____ each year

answer

$49billion

question

(Adverse or Moral Hazard?) As the cost of insurance goes up, those individuals with lower risks may decide not to purchase insurance at all or acquire a policy that covers only major expenses. So individuals who do decided to purchase coverage, will be those with higher risks; Premiums may rise

answer

Adverse

question

(Adverse or Moral Hazard?) When individuals are insured, their likelihood of taking preventative actions are reduced

answer

Moral hazard

question

Americans pay only about ___% of health care costs out-of-pocket. Total third party payments amount to about ___%

answer

13.7%, 82%

question

5 dissatisfactions with the insurance provided by the market....

answer

1) Some ppl buy too much insurance and insurance induces excessive expenditure on health care 2) Many ppl cannot obtain insurance or can obtain it only at an excessive cost 3) Transaction costs, including profit are excessive 4) Competition among the health insurance providers is too limited 5) Insurance firms have restricted consumer choice and often denied individuals access to the care that they need and that their doctors think is appropriate

question

Costs of buying and selling goods, including the cost of running markets

answer

Transaction costs

question

5 costs of running private insurance system:

answer

1) There are high costs of selling insurance policies and paying the benefits 2) Insurance firms spend large amounts in an effort to identify good and bad risks 3) Doctors and hospitals must fill out vast numbers of forms (administrative costs) 4) Still more costs are borne by the insured as they try to collect on their insurance 5) Insurance firms need to monitor doctors and hospitals to make sure that claims are legitimate

question

Medicare: 1) provides for who?? 2) 3 components

answer

1) over 65 and some younger ppl with disability 2) Hospital Insurance, Supplementary medical insurance ( pays for doctors' services), Prescription drugs

question

What happened in the 18th century that spurred the governments role in education

answer

The Land Ordinance of 1785 set aside land in the newly established Western territories to fund public schools

question

What is the single largest expenditure for state and local govs

answer

education

question

The federal gov funds about ___% of all education expenditures and about ____% in elementary and secondary education

answer

15%, 8-9%

question

What specific purposes do the federal funds go to?

answer

-Aid to the disadvantaged -Encouraged the establishment of educational standards -Promoting science education -Providing financial assistance to expand college participation

question

The income gap ____ from WW2 to the 1970s. It has ____ since the 1980s

answer

fell, risen

question

What is the main explanation for the rise in income inequality?

answer

globalization, skilled-biased technological change, and automation have reduced the demand for unskilled workers

question

higher education (expanded or diminished) in the second half of the 20th century? Largely due to what?

answer

expanded; the GI Bill

question

The US spends ___ per pupil on primary education than almost any other country. It spends ___% more than the OECD average

answer

more; 40%

question

Competition in education is limited because there are....

answer

economies of scale

question

Explain education as a market failure within Merit goods and redistribution

answer

It is often considered a merit good.. and can be a good way of exerting in-kind redistribution (increases equality of opportunity)

question

Explain how education spurs imperfect capital markets

answer

Collateralizing human capital is illegal so it is not possible to finance education by offering a bank the acquired knowledge as collateral for a credit. Therefore, there is a moral hazard

question

The average rate of return for every additional year of schooling is ___%

answer

10%

question

Social returns to education include:

answer

Better general social functionality, increased civic and democratic engagement, political stability, increased productivity and economic growth, higher tax receipts, reduced crime and prison costs, improved health outcomes, integration of immigrants, creation of a national identity

question

What two theories explain the correlation between education and earnings?

answer

-Human capital theory -Signaling(screening) theory

question

Theory: education is an investment in human capital; an individual invests in education in order to maximize her lifetime well-being

answer

Human Capital Theory

question

What theory.... 1) States that education enhances productivity 2) States that a worker's level of education helps employers identify her innate productivity (education does not effect productivity)

answer

1) Human Capital Theory 2) Signaling Theory

question

Review: 7 Assumptions of signaling theory

answer

1) Individuals are rational and invest in education as long as the benefit of an additional year of education exceeds the cost 2) Workers only care about education as long as it increases earnings 3) Individuals differ by their innate ability (or productivity) 4) Education does not effect productivity 5) Acquiring education is costly 6) Costs of acquiring education are different for different workers 7) More productive individuals face lower costs of acquiring education (they learn faster)

question

Theory: Since productivity is not directly observable by employers, employers could use years of education or education qualifications to predict a workers' productivity; workers could acquire education to signal their productivity to employers

answer

Signaling Theory of Education

question

(True or False?) Children's level of school readiness (or ability) are correlated with their households' income

answer

TRUE

question

(True or False?) The abilities and motivation that children bring to school play a far greater role in promoting their performance in school than do the traditional inputs that receive so much attention in public policy

answer

TRUE

question

Program that was an example of successful early education intervention

answer

Perry Preschool Program

question

What policies attempt to give parents the opportunity to choose the school of their children

answer

School choice policies

question

(True or False?) There is evidence that more competition indeed increases school performance

answer

TRUE

question

Consists of a tax-financed award to households whose children attend a private school to pay for tuition fees

answer

vouchers

question

Refers to the impact that a student's class and school mates have on her school performance

answer

peer group effect

question

Self-managed schools, publicly funded, private producers of education; have more flexibility with things like curriculum, teaching methods, and length of school day and year

answer

Charter Schools

question

Review: In order to make charter schools accountable, they must...

answer

adhere to some standards set by the education authority, students must take standardized tests, its success is measured by how their students perform in those tests, if performance is sufficiently weaker than in nearby districts, they may face closure or losing their charter

question

Have charter school increased or decreased

answer

Increased

question

3 Steps of matching mechanisms for public schools

answer

1) Each student submits a preference ranking of the schools 2) For each school a priority ordering is determined according to a pre-established priority hierarchy (ie. residential, sibling priorities) 3) An algorithm that assigns students to schools is implemented

question

The 3 most relevant properties of matching mechanisms for public schools

answer

1) Elimination of justified envy (stability) 2) Pareto-efficiency 3) Strategy-proofness (non-manipulability)

question

Relevant property of mechanism: When there is NO unmatched student-school pair (i,s) such that student i prefers school s to her assignment and she has higher priority in school s than some other student is assigned a seat at that school

answer

Stability

question

Relevant property of mechanism: Exists when student i prefers school s over her assignment and has higher priority at school s than some other student who is assigned a seat at that school; eliminated by stability

answer

justified envy

question

Relevant property of mechanism: a student assignment mechanism where truthful preference revelation is a dominant strategy for students (ie. a student cannot improve her outcome by misrepresenting her preferences)

answer

Strategy-Proofness

question

Relevant property of mechanism: A type of matching where there is no other matching which assigns each student a weakly better school and at least one student a strictly better school

answer

Pareto-Efficient

question

An initiative to introduce competition within the public sector; idea that school districts contract outside managers to run the school so competition b/w managing teams will lead to higher performance

answer

Contracting out

question

Initiative to shift the authority from school district bureaucracy to the individual school and their principals

answer

School decentralization

question

Policy proposal that involves providing incentives for teachers; the idea is to link part of their pay to the performance of their students

answer

Teachers and merit pay

question

Act in which the main idea was that in order to have a basis for educational reform, clear performance measure for schools must be established

answer

No Child Left Behind

question

Review: No Child Left Behind Act was established in 2001. It was a bipartisan agreement. Under the NCLB states are required to what? and it provides grants for what?

answer

1) -Conduct annual student assessments linked to state standard -Participate in National Assessment of Educational Progress reading and mathematics tests in 4th and 8th grades -Develop adequate yearly progress standards and take specific steps when AYP is not met -Ensure that their teachers were "highly qualified" 2) Grants are provided for the development and implementation of standards-based assessments, curriculum development in priority subject areas, targeting of disadvantaged students, and the promotion of education innovations

question

What program, launched in 2009, is a competitive grant program to assist states in implementing innovation education reform

answer

Race to the Top

question

What four areas does Race to the Top program provide grants for?

answer

1) Upgrading of standards and assessments 2) Improvement of data collection and utilization 3) Enhancement of teacher effectiveness 4) Equity in teacher distribution and turnaround of lowest performing schools

question

Act passed in December 2015 that transfers decision power to states and school districts; there is tension between equity and efficiency

answer

Every Student Succeeds Act

question

Hypothesis: Competition among communities ensures efficiency in the supply of local public goods, just a competition among firms ensure efficiency in the supply of private goods

answer

Tiebout Hypothesis

question

Limitations of the Tiebout Hypothesis

answer

1) Externalities of the decisions of the community 2) Imperfect competition because of limited number of communities 3) Tax competition may simply lead to lower taxes on businesses 4) Lack of redistribution due to free migration and local competition

question

(Progressive or regressive?) benefits higher income individuals and communities more than lower-income ones

answer

Regressive

question

(Progressive or regressive?) State and local taxes are deductible on federal income tax returns and interest on state and local government bonds in exempt from federal taxation

answer

Regressive

question

What is the key difference b/w higher education and k-12 education

answer

students have reached an age at which they can make decisions for themselves; thus the merit good and externality arguments are weaker for gov intervention

question

5 ways government intervention is pursued in higher education

answer

1) States greatly subsidize higher education 2) Federal government provides grants based on financial need 3) Federal government sponsors loan programs for higher education 4) It supports a limited work-study program 5) It provides tuition tax reductions and credits

question

(Progressive or Regressive?) public subsidies to higher education

answer

regressive

question

Federal guaranteed loans were introduced in ..

answer

1965

question

6 more flexible credit instruments that were introduced in regards to student loans

answer

1) Graduated repayment banks 2) Extended repayment 3) Income-based 4) Pay-as-you-earn 5) Income contingent 6) Income sensitive

Public Economics UF Final (Francisco Mora) – Flashcards

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