HCMG Exam 1 Questions and Correct Answers Latest Update 2025 Graded A+
US healthcare spending - Answers -US spends more money per capita than most other nations
-US has similar utilization for many services, but we pay higher prices
quasi-market system - Answers -prices negotiated by private insurers with providers
-public insurers (ex. Medicare) set (some) prices
-gov does not control the level of payment
quasi-governmental system - Answers -prices regulated in many other nations
-often a role for private insurance in other nations
market equilibrium - Answers -setting prices too low leads to shortages; setting them too high leads to
surpluses
-provider competition is limited in many cases
-asymmetric information between doctors and consumers
-third party payments changes consumer prices
low vs high value care - Answers -people often not incentivized to choose high value care
-difficulty finding plans that work for them
-prices not posted, making it hard to shop around
-lack of medical knowledge, lack of knowledge of system, and equate price with quality
mortality in healthcare spending - Answers -patients with highest one-year mortality risk account for
less than 5 percent of spending
-if we cannot predict death with some degree of certainty, resources are not seen as wasted through
providing care
opportunity costs - Answers -value of next best alternative not chosen
-if we did not spend money on healthcare, one could think we could spend it on something else
-decisions are made everyday about how to allocate resources; tradeoffs difficult to see in healthcare
premium - Answers per period cost of being insured
cost sharing - Answers payments from patients to providers
deductible - Answers an amount a patient must spend before the insurer will pay any expenses
, copay - Answers patient pays a specific dollar amount to see a provider
coinsurance - Answers patient pays a percentage of the bill
out of pocket max/stop loss - Answers a limit on overall out of pocket costs for the patient
network - Answers group providers across multiple specialties with contract to provide to members of
health insurance plan
role of insurance - Answers -protects against losses; reduces economic uncertainty; improves welfare
-form of prepayment for certain services with little uncertainty
-mechanism to redistribute health care expenses across the population
adverse selection - Answers -patients knows more than insurers
-medical spending skewed and concentrated
-demand for insurance is uneven across risk types
-risk pool determines premiums and risk signals may be weak
coverage of premiums - Answers -covers administrative costs; costs of contracting
-compensates for putting capital at risk and having expertise
medical loss ratio - Answers % of premiums that health plan spends on medical claims/quality
improvements vs administrative costs
limiting adverse selection - Answers -group insurance: sell to employer groups rather than to individuals,
build in pool of fairly healthy and diverse adults -public policies can mandate all individuals to purchase
health insurance
setting premiums - Answers -individual risk rated (pre-ACA, life insurance, auto insurance)
-experience rated (ESHI plans)
-community rated: uniform prices (medicare advantage, Medicare Part D, Post-ACA)
community vs. experience rated - Answers -community rated determined by location, age, and tobacco
use)
-experience: vary by health status and health care use
RAND experiment - Answers -one group put in free, while the other was set in high-deductible plan
-found that high-deductible plan used 25% less care than the free-care group
US healthcare spending - Answers -US spends more money per capita than most other nations
-US has similar utilization for many services, but we pay higher prices
quasi-market system - Answers -prices negotiated by private insurers with providers
-public insurers (ex. Medicare) set (some) prices
-gov does not control the level of payment
quasi-governmental system - Answers -prices regulated in many other nations
-often a role for private insurance in other nations
market equilibrium - Answers -setting prices too low leads to shortages; setting them too high leads to
surpluses
-provider competition is limited in many cases
-asymmetric information between doctors and consumers
-third party payments changes consumer prices
low vs high value care - Answers -people often not incentivized to choose high value care
-difficulty finding plans that work for them
-prices not posted, making it hard to shop around
-lack of medical knowledge, lack of knowledge of system, and equate price with quality
mortality in healthcare spending - Answers -patients with highest one-year mortality risk account for
less than 5 percent of spending
-if we cannot predict death with some degree of certainty, resources are not seen as wasted through
providing care
opportunity costs - Answers -value of next best alternative not chosen
-if we did not spend money on healthcare, one could think we could spend it on something else
-decisions are made everyday about how to allocate resources; tradeoffs difficult to see in healthcare
premium - Answers per period cost of being insured
cost sharing - Answers payments from patients to providers
deductible - Answers an amount a patient must spend before the insurer will pay any expenses
, copay - Answers patient pays a specific dollar amount to see a provider
coinsurance - Answers patient pays a percentage of the bill
out of pocket max/stop loss - Answers a limit on overall out of pocket costs for the patient
network - Answers group providers across multiple specialties with contract to provide to members of
health insurance plan
role of insurance - Answers -protects against losses; reduces economic uncertainty; improves welfare
-form of prepayment for certain services with little uncertainty
-mechanism to redistribute health care expenses across the population
adverse selection - Answers -patients knows more than insurers
-medical spending skewed and concentrated
-demand for insurance is uneven across risk types
-risk pool determines premiums and risk signals may be weak
coverage of premiums - Answers -covers administrative costs; costs of contracting
-compensates for putting capital at risk and having expertise
medical loss ratio - Answers % of premiums that health plan spends on medical claims/quality
improvements vs administrative costs
limiting adverse selection - Answers -group insurance: sell to employer groups rather than to individuals,
build in pool of fairly healthy and diverse adults -public policies can mandate all individuals to purchase
health insurance
setting premiums - Answers -individual risk rated (pre-ACA, life insurance, auto insurance)
-experience rated (ESHI plans)
-community rated: uniform prices (medicare advantage, Medicare Part D, Post-ACA)
community vs. experience rated - Answers -community rated determined by location, age, and tobacco
use)
-experience: vary by health status and health care use
RAND experiment - Answers -one group put in free, while the other was set in high-deductible plan
-found that high-deductible plan used 25% less care than the free-care group
