©BRAINBARTER 2024/2025 ALL RIGHTS RESERVED.
HCMG Exam 1 Study Guide 100% Verified.
US healthcare spending - Answer✔-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 - Answer✔-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 - Answer✔-prices regulated in many other nations
-often a role for private insurance in other nations
market equilibrium - Answer✔-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 - Answer✔-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 - Answer✔-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 - Answer✔-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
1|Page
, ©BRAINBARTER 2024/2025 ALL RIGHTS RESERVED.
premium - Answer✔per period cost of being insured
cost sharing - Answer✔payments from patients to providers
deductible - Answer✔an amount a patient must spend before the insurer will pay any expenses
copay - Answer✔patient pays a specific dollar amount to see a provider
coinsurance - Answer✔patient pays a percentage of the bill
out of pocket max/stop loss - Answer✔a limit on overall out of pocket costs for the patient
network - Answer✔group providers across multiple specialties with contract to provide to
members of health insurance plan
role of insurance - Answer✔-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 - Answer✔-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 - Answer✔-covers administrative costs; costs of contracting
-compensates for putting capital at risk and having expertise
medical loss ratio - Answer✔% of premiums that health plan spends on medical claims/quality
improvements vs administrative costs
limiting adverse selection - Answer✔-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 - Answer✔-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 - Answer✔-community rated determined by location, age, and
tobacco use)
-experience: vary by health status and health care use
2|Page
HCMG Exam 1 Study Guide 100% Verified.
US healthcare spending - Answer✔-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 - Answer✔-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 - Answer✔-prices regulated in many other nations
-often a role for private insurance in other nations
market equilibrium - Answer✔-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 - Answer✔-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 - Answer✔-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 - Answer✔-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
1|Page
, ©BRAINBARTER 2024/2025 ALL RIGHTS RESERVED.
premium - Answer✔per period cost of being insured
cost sharing - Answer✔payments from patients to providers
deductible - Answer✔an amount a patient must spend before the insurer will pay any expenses
copay - Answer✔patient pays a specific dollar amount to see a provider
coinsurance - Answer✔patient pays a percentage of the bill
out of pocket max/stop loss - Answer✔a limit on overall out of pocket costs for the patient
network - Answer✔group providers across multiple specialties with contract to provide to
members of health insurance plan
role of insurance - Answer✔-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 - Answer✔-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 - Answer✔-covers administrative costs; costs of contracting
-compensates for putting capital at risk and having expertise
medical loss ratio - Answer✔% of premiums that health plan spends on medical claims/quality
improvements vs administrative costs
limiting adverse selection - Answer✔-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 - Answer✔-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 - Answer✔-community rated determined by location, age, and
tobacco use)
-experience: vary by health status and health care use
2|Page
