HCMG | Questions with 100% Verified Answers | Latest Update
2026/2027
Question: 1. What are some of the reasons for the increased demand of medical services since 1965?
Answer:
The enactment of Medicare and Medicaid increased the governments role in healthcare and provided insurance for the
elder and indigent. Declining portion of expediters paid out of pocket.
Question: 1. Why has employer paid health insurance been an important stimulant of demand for health insurance?
Answer:
Employees could receive part of their pay in comprehensive health benefits and avoid paying higher taxes by not being
pushed into a higher tax bracket.
Question: 1. How did hospital payment methods in the 1960s and 1970s affect hospital investment policies and
incentives to improve efficiency?
Answer:
Cost plus 2% reimbursement caused hospitals to expand capacity, invest in technology, and duplicate facilities. There
was no incentive to be efficient.
Question: 1. Why were HMOs and managed care not more prevalent in the 1960s and 1970s?
Answer:
Government imposed restrictions on limiting providers and made HMOs ineligible for government capitation
payments. Restrictions on advertising, and non profit status decreased their availability.
Question: 1. What choices has the federal government had to reduce greater than projected medicare expenditures?
Answer:
1) raise medicare payroll and income tax, 2) require aged to pay higher premiums 3) reduce payments to hospitals
Question: 1. What events during the 1980s in both the public and private sectors made the delivery of medical services
price competitive?
Answer:
HMO act of 1974 legitimized HMOs and the removal of the free choice of provider rule. Subsidies to medical schools
increased numbers of physicians. DRG payment system enacted. Business pressured health insurers to lower costs
because of the recession. Insurers increased deductibles and copayments and increased patients price sensitivity.
Applicability of anti-trust laws to HCO.
, Question: 2. How does a competitive market determine what types of goods and services are produced, how much it
costs to produce them, and who receives them?
Answer:
Consumers communicate their preferences for goods and services through their expenditures and producers produce
those goods and services consumers want. Producers must use their resources efficiently to produce the goods and
services at costs consumers are willing to pay.
Question: 2. Why do economists believe the value of additional employer-paid health insurance is worth less than its
full costs?
Answer:
It is purchased with pre-tax dollars. The price of the insurance is reduced by the employees tax-bracket.
Question: 2. Why do rising medical expenditures cause concern?
Answer:
Spending more on medical care means there is less to spend on other goods and services. Increased spending on
healthcare is no longer optimal and will no provide less benefit than the cost.
Question: 2. Why do inefficiencies exist in the use and provision of medical services?
Answer:
Consumers do not have to pay the full cost of their medical services they receive. They consume too much because
their out of pocket expense is lower than the actual cost.
Question: 2. Why are large employers and government concerned about rising medical expenditures?
Answer:
The government pays for the care of the elderly and indigent and wants to keep prices low. The business sector's
spending on health insurance is increasing due to increasing cost of care.
Question: 3. How can the health production function allocate funds to improve health?
Answer:
A cost per life saved calculation can be performed and money should be allocated to the program that saves the most
lives for the least amount of money.
Question: 3. Why does the United States spend an increasing portion of its resources on medical services, although
less cost effective than other methods for improving health status?
Answer:
Medical services are not only used to improve health. They are also used to treat pain and treat terminally ill patients.
2026/2027
Question: 1. What are some of the reasons for the increased demand of medical services since 1965?
Answer:
The enactment of Medicare and Medicaid increased the governments role in healthcare and provided insurance for the
elder and indigent. Declining portion of expediters paid out of pocket.
Question: 1. Why has employer paid health insurance been an important stimulant of demand for health insurance?
Answer:
Employees could receive part of their pay in comprehensive health benefits and avoid paying higher taxes by not being
pushed into a higher tax bracket.
Question: 1. How did hospital payment methods in the 1960s and 1970s affect hospital investment policies and
incentives to improve efficiency?
Answer:
Cost plus 2% reimbursement caused hospitals to expand capacity, invest in technology, and duplicate facilities. There
was no incentive to be efficient.
Question: 1. Why were HMOs and managed care not more prevalent in the 1960s and 1970s?
Answer:
Government imposed restrictions on limiting providers and made HMOs ineligible for government capitation
payments. Restrictions on advertising, and non profit status decreased their availability.
Question: 1. What choices has the federal government had to reduce greater than projected medicare expenditures?
Answer:
1) raise medicare payroll and income tax, 2) require aged to pay higher premiums 3) reduce payments to hospitals
Question: 1. What events during the 1980s in both the public and private sectors made the delivery of medical services
price competitive?
Answer:
HMO act of 1974 legitimized HMOs and the removal of the free choice of provider rule. Subsidies to medical schools
increased numbers of physicians. DRG payment system enacted. Business pressured health insurers to lower costs
because of the recession. Insurers increased deductibles and copayments and increased patients price sensitivity.
Applicability of anti-trust laws to HCO.
, Question: 2. How does a competitive market determine what types of goods and services are produced, how much it
costs to produce them, and who receives them?
Answer:
Consumers communicate their preferences for goods and services through their expenditures and producers produce
those goods and services consumers want. Producers must use their resources efficiently to produce the goods and
services at costs consumers are willing to pay.
Question: 2. Why do economists believe the value of additional employer-paid health insurance is worth less than its
full costs?
Answer:
It is purchased with pre-tax dollars. The price of the insurance is reduced by the employees tax-bracket.
Question: 2. Why do rising medical expenditures cause concern?
Answer:
Spending more on medical care means there is less to spend on other goods and services. Increased spending on
healthcare is no longer optimal and will no provide less benefit than the cost.
Question: 2. Why do inefficiencies exist in the use and provision of medical services?
Answer:
Consumers do not have to pay the full cost of their medical services they receive. They consume too much because
their out of pocket expense is lower than the actual cost.
Question: 2. Why are large employers and government concerned about rising medical expenditures?
Answer:
The government pays for the care of the elderly and indigent and wants to keep prices low. The business sector's
spending on health insurance is increasing due to increasing cost of care.
Question: 3. How can the health production function allocate funds to improve health?
Answer:
A cost per life saved calculation can be performed and money should be allocated to the program that saves the most
lives for the least amount of money.
Question: 3. Why does the United States spend an increasing portion of its resources on medical services, although
less cost effective than other methods for improving health status?
Answer:
Medical services are not only used to improve health. They are also used to treat pain and treat terminally ill patients.
