哈维财政学英文题库 Chapter 10

Government and the Market for Health Care

Multiple Choice

1. The highest percentage of uses of health care funds in the US for 2004 was A) research B) hospital care C) home health care D) nursing home care E) all of the above Ans: b

2. There are two forms of health care provided by the government: _________ is provided for the poor, and _________ is provided for the elderly. A) HMO; Medicare B) PMI; HMO

C) Medicaid; Medicare D) Medicare; Medicaid E) SSI; Medicare Ans: c

3. What was the percentage of GDP that was expended, in total, on health care? A) 0.132% B) 12% C) 13.2% D) 15% E) 22% Ans: d

4. __________ account(s) for the largest portion of public health expenditure in the United States. A) Children’s hospitals

B) Universal health coverage C) Medicaid D) Medicare

E) Workers’ compensation Ans: d

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5. The prescription drug benefit plan was added to Medicare in A) 2006 B) 1996 C) 1965 D) 1944 E) 1933 Ans: a

6. The __________ level of government accounts for the largest share of health care spending. A) regional B) state

C) municipal D) federal Ans: d

7. US health care spending amounts to_____ per year. A) $7.8 billion B) $1.1 million C) $1.7 trillion D) $4.4 trillion Ans: c

8. The Medicaid program provides health insurance for the A) elderly B) poor

C) veterans of wars D) slow Ans: b

9. A catastrophic insurance policy is one which A) has cats causing health crises

B) insurance policy that has a high deductible C) generous coverage for high medical costs D) a & c E) b & c Ans: e

10. What does job lock mean?

A) A tendency for workers to remain in their jobs to keep their insurance coverage B) A job where a time clock is used

C) A job that provides insurance coverage only after several years of employment D) all of the above E) none of the above Ans: a

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11. How many elderly people are covered by Medicare? A) one third B) one half C) almost all D) almost none Ans: c

12. In the United States, universal health care is administered by A) the federal government. B) state governments.

C) private insurance companies. D) hospitals.

E) none of the above. Ans: e

13. In 1980, 26 million people in the US were over the age of 65. What is the amount currently? A) 33 million B) 34 million C) 35 million D) 36 million E) 37 million Ans: c

14. Private health insurance pays for what percentage of health care expenditures? A) 0 B) 5 C) 40 D) 35 E) 90 Ans: d

15. Generally, managed care means

A) health care is provided by teams, not by an individual doctor. B) limits are placed on utilization of health care services. C) health care is provided by the government to all citizens. D) doctors pick which patients they want to see. Ans: b

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Essay

16. Suppose that the quantity demanded of visits to a doctor per year is given by X = 12 – 0.05P, where X is the number of visits and P is the price the patient pays for a visit.

(A) How many visits would the patient make if he or she had to pay the full price of a visit, $100? (B) How many visits would a patient make if he or she was insured and had to pay only a 15% co-insurance payment per visit?

(C) How many visits would the patient make if medical services were free? Ans:

(A) At the full price of $100, she would make X = 12 – 0.05(100) = 7 visits.

(B) If she has to pay the 15% co-pay per visit, her price is just $15, so X = 12 – 0.05(15) = 11.25. (C) If services were free, she would make X = 12 – 0.05(0) = 12 visits.

17. Suppose that the demand curve Dm for medical services can be characterized by the equation M = 2000 – P, where M is the amount of medical services received per year and P is the price. Suppose further that P0 is constant at 800.

(A) Find the equilibrium quantity of services at P0.

(B) Find the equilibrium quantity of services when there is only a co-payment of 20% required such that the price is 0.2P0.

(C) How much additional expenditures induced by insurance are created? Ans:

(A) At a price of $800, 2,000 – 800 = 1,200.

(B) To find the answer, we need 0.2(800) = 160. Therefore, 2,000 – 160 = 1,840. (C) The area we want which is 800(1,840 – 1,200) = 512,000.

18. Suppose that the demand for medical services can be characterized by the equation X = 500 – P/3. Suppose further that the supply of health services can be characterized by the equation X = P – 100.

(A) What is the equilibrium quantity and price in the market for health services?

(B) In an effort to make health services more affordable, the government restricts the price of health services to be no greater than $250. What will happen to the quantity of health services in the market? Ans:

(A) Set 1,500 – 3X = 100 + X to get that X* = 350 and P* = $450.

(B) At a price of $250, a shortage of health services will occur. X* will now be only 150.

Multiple choice

19. Under federal tax law, employer-provided health insurance is not subject to taxation. A) True. B) False. C) Uncertain. Ans: a

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20. At any given time, about 90% of the population in the United States lacks health insurance. A) True. B) False. C) Uncertain. Ans: b

21. Part C of Medicare allows eligible individuals to have health care coverage up to $100,000 annually. A) True. B) False. C) Uncertain. Ans: b

22. Job lock is good for the US work force. A) True. B) False. C) Uncertain. Ans: c

23. HI (Hospital Insurance) is financed by a payroll tax, while SMI (Supplementary Medical Insurance) is financed out of general revenues. A) True. B) False. C) Uncertain. Ans: a

24. Refer to Figure 10.3, expenditures as a percent of GDP fell dramatically in the 1980s. A) True. B) False. C) Uncertain. Ans: b

25. Medicare requires individuals to take a standard health test first, but Medicaid does not. A) True. B) False. C) Uncertain. Ans: b

26. Due to moral hazard, the goal of providing security is likely to conflict with the goal of efficiency. A) True. B) False. C) Uncertain. Ans: a

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27. The health care system currently in place will be dramatically changed in the next four years. A) True. B) False. C) Uncertain. Ans: c

28. One reason for the recent increases in health care costs is the aging of the American population. A) True. B) False. C) Uncertain. Ans: a

Essay

29. Refer to figure 10.5 in your text. What would be the impact on the three categories of people if they were given the value of medical insurance in cash instead of having it provided?

Ans: In general, we can not answer this question. In panel A we could expect that this person

would choose to have more insurance. In panel B it is possible for this person to continue with the same level of coverage but have more of all other goods. In addition, this person could actually choose to have less insurance. The same thing is possible for the individual in panel C.

30. With the aging of the American population, it might be necessary to reduce the medical benefits to elderly. How do you feel about this idea?

Ans: This is a personal question, but unless there is some sort of restructuring of the medical system, it may be necessary to reduce benefits, increase premiums, or limit coverage of certain types of care. One solution may lie in greater emphasis on preventative care against smoking and obesity.

31. What do you feel would be the effect of a mandate that requires all people to purchase health insurance?

Ans: Some people do not have insurance because they choose not to, not because they can not afford it. Some people feel that the money spent on insurance would enhance their quality of life more by being spent on other items. Given preexisting illnesses, it would be very costly for some to afford. Car insurance, however, is mandatory for all who drive; however, those who do not want to pay do not have to drive. With health insurance, this option does not exist.

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