MHA 707 EXAM C Comprehensive Test Bank — 200
Multiple-Choice Questions with Answers & Detailed
Rationales Healthcare Systems & Administration |
Based on LSUS MHA 707 Curriculum | Updated
2026/2027
1. In the context of health insurance markets, the phenomenon where
individuals alter their behavior because they know they are protected against
financial risk is known as:
- A) Adverse selection
- B) Moral hazard
- C) Risk pooling
- D) Experience rating
Answer: B
Rationale: Moral hazard occurs when the act of insuring an event increases
the likelihood that the event will happen. In healthcare, this manifests as
induced demand—patients may seek more services when they know
insurance will cover the cost. Adverse selection (A) refers to the situation
where sicker individuals are more likely to purchase insurance. Risk pooling
(C) is the sharing of risk among many individuals. Experience rating (D) tailors
premiums based on a group's claims history.
,2. Which of the following best describes the concept of adverse selection in
health insurance markets?
- A) Insurers charging higher premiums to individuals with pre-existing
conditions
- B) Sicker individuals being more likely to purchase insurance than healthier
individuals
- C) Individuals changing their behavior after obtaining insurance coverage
- D) Insurance companies pooling risk across large populations
Answer: B
Rationale: Adverse selection describes the situation where one party to a
transaction has more information than the other. In health insurance, sicker
individuals are more likely to want insurance, while healthier individuals may
forgo coverage. This creates an imbalance in the risk pool and can lead to
market failure. Moral hazard (C) involves behavior change after obtaining
coverage.
3. The National Health Expenditure Accounts (NHEA) are published by which
federal department?
- A) Department of Health and Human Services (DHHS)
- B) Centers for Medicare & Medicaid Services (CMS)
- C) Department of Treasury
- D) Federal Reserve Board
,Answer: A
Rationale: The NHEA provides official estimates of health care spending in the
United States and is published by the Department of Health and Human
Services (DHHS). The accounts measure health care consumption and health
care investment in a comprehensive, multidimensional, and consistent
framework.
4. According to the National Health Expenditure Accounts (NHEA), the largest
share of national health expenditures is attributed to:
- A) Physician and clinical services
- B) Prescription drugs
- C) Hospital care
- D) Nursing home care
Answer: C
Rationale: Hospital care represents the largest share of National Health
Expenditures (NHE), accounting for approximately 33% of total spending.
Physician services represent the second largest share at approximately 26%.
Prescription drugs account for approximately 9.5-10.5% of NHE.
, 5. Which of the following represents the correct breakdown of National
Health Expenditures (NHE) by category?
- A) Hospitals (33%), Physicians (26%), Prescription Drugs (20%)
- B) Hospitals (33%), Physicians (26%), Prescription Drugs (10%)
- C) Hospitals (40%), Physicians (30%), Prescription Drugs (15%)
- D) Hospitals (25%), Physicians (35%), Prescription Drugs (12%)
Answer: B
Rationale: Based on NHEA data, hospital care accounts for approximately 33%
of total spending, physician services account for approximately 26%, and
prescription drugs account for approximately 9.5-10.5%. This makes hospitals
the largest category, physicians second, and prescription drugs third.
6. Health Consumption Expenditures (HCE) is defined as:
- A) All health care consumption and investments in medical structures and
equipment
- B) A subset of NHE that includes all medical goods and services used to
diagnose, treat, and prevent health problems
- C) Spending on hospital construction and medical research
- D) Total government spending on public health programs
Answer: B
Multiple-Choice Questions with Answers & Detailed
Rationales Healthcare Systems & Administration |
Based on LSUS MHA 707 Curriculum | Updated
2026/2027
1. In the context of health insurance markets, the phenomenon where
individuals alter their behavior because they know they are protected against
financial risk is known as:
- A) Adverse selection
- B) Moral hazard
- C) Risk pooling
- D) Experience rating
Answer: B
Rationale: Moral hazard occurs when the act of insuring an event increases
the likelihood that the event will happen. In healthcare, this manifests as
induced demand—patients may seek more services when they know
insurance will cover the cost. Adverse selection (A) refers to the situation
where sicker individuals are more likely to purchase insurance. Risk pooling
(C) is the sharing of risk among many individuals. Experience rating (D) tailors
premiums based on a group's claims history.
,2. Which of the following best describes the concept of adverse selection in
health insurance markets?
- A) Insurers charging higher premiums to individuals with pre-existing
conditions
- B) Sicker individuals being more likely to purchase insurance than healthier
individuals
- C) Individuals changing their behavior after obtaining insurance coverage
- D) Insurance companies pooling risk across large populations
Answer: B
Rationale: Adverse selection describes the situation where one party to a
transaction has more information than the other. In health insurance, sicker
individuals are more likely to want insurance, while healthier individuals may
forgo coverage. This creates an imbalance in the risk pool and can lead to
market failure. Moral hazard (C) involves behavior change after obtaining
coverage.
3. The National Health Expenditure Accounts (NHEA) are published by which
federal department?
- A) Department of Health and Human Services (DHHS)
- B) Centers for Medicare & Medicaid Services (CMS)
- C) Department of Treasury
- D) Federal Reserve Board
,Answer: A
Rationale: The NHEA provides official estimates of health care spending in the
United States and is published by the Department of Health and Human
Services (DHHS). The accounts measure health care consumption and health
care investment in a comprehensive, multidimensional, and consistent
framework.
4. According to the National Health Expenditure Accounts (NHEA), the largest
share of national health expenditures is attributed to:
- A) Physician and clinical services
- B) Prescription drugs
- C) Hospital care
- D) Nursing home care
Answer: C
Rationale: Hospital care represents the largest share of National Health
Expenditures (NHE), accounting for approximately 33% of total spending.
Physician services represent the second largest share at approximately 26%.
Prescription drugs account for approximately 9.5-10.5% of NHE.
, 5. Which of the following represents the correct breakdown of National
Health Expenditures (NHE) by category?
- A) Hospitals (33%), Physicians (26%), Prescription Drugs (20%)
- B) Hospitals (33%), Physicians (26%), Prescription Drugs (10%)
- C) Hospitals (40%), Physicians (30%), Prescription Drugs (15%)
- D) Hospitals (25%), Physicians (35%), Prescription Drugs (12%)
Answer: B
Rationale: Based on NHEA data, hospital care accounts for approximately 33%
of total spending, physician services account for approximately 26%, and
prescription drugs account for approximately 9.5-10.5%. This makes hospitals
the largest category, physicians second, and prescription drugs third.
6. Health Consumption Expenditures (HCE) is defined as:
- A) All health care consumption and investments in medical structures and
equipment
- B) A subset of NHE that includes all medical goods and services used to
diagnose, treat, and prevent health problems
- C) Spending on hospital construction and medical research
- D) Total government spending on public health programs
Answer: B
