Test Bank
, Catalog
Chapter_01__U_S__Medical_Care__A_System_at_the_Crossroads·································································· 1
Chapter_02__Health_Care_Spending_Issues····························································································11
Chapter_03__Health_Care_Markets__Can_They_Work_··············································································23
Chapter_04__Welfare_Implications_in_Medical_Markets············································································· 40
Chapter_05__Economic_Evaluation_in_Health_Care·················································································· 53
Chapter_06__Demand_for_Health_and_Medical_Care················································································ 67
Chapter_07__Population_Health···········································································································86
Chapter_08__The_Market_for_Health_Insurance·····················································································100
Chapter_09__Managed_Care············································································································· 117
Chapter_10__The_Physicians__Services_Market······················································································131
Chapter_11__The_Hospital_Services_Market·························································································· 147
Chapter_12__Pharmaceuticals············································································································161
Chapter_13__Medicare·····················································································································181
Chapter_14__Medicaid····················································································································· 200
Chapter_15__Health_Systems_in_High_Income_Countries········································································· 216
Chapter_16__Medical_Care_Reform_in_the_United_States·········································································235
Chapter_17__Lessons_for_Public_Policy································································································250
,Chapter 01: U.S. Medical Care: A System at the Crossroads
1. Charging higher prices for one category of patients in order to provide free or subsidized care to another group is
called:
a. price discrimination.
b. cost shifting.
c. categorical costing.
d. reprehensible and unethical.
e. creative accounting.
ANSWER: b
FEEDBACK: a. Incorrect. Cost shifting is the practice of charging higher prices to one group of
patients, usually those with private health insurance, in order to subsidize the
care of those whose payments do not cover the fully allocated cost of the care
they receive.
b. Correct. Cost shifting is the practice of charging higher prices to one group of
patients, usually those with private health insurance, in order to subsidize the
care of those whose payments do not cover the fully allocated cost of the care
they receive.
c. Incorrect. Cost shifting is the practice of charging higher prices to one group of
patients, usually those with private health insurance, in order to subsidize the
care of those whose payments do not cover the fully allocated cost of the care
they receive.
d. Incorrect. Cost shifting is the practice of charging higher prices to one group of
patients, usually those with private health insurance, in order to subsidize the
care of those whose payments do not cover the fully allocated cost of the care
they receive.
e. Incorrect. Cost shifting is the practice of charging higher prices to one group of
patients, usually those with private health insurance, in order to subsidize the
care of those whose payments do not cover the fully allocated cost of the care
they receive.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: 1-1a - Emergence of the Modern Medical System
DATE CREATED: 1/24/2022 3:04 AM
DATE MODIFIED: 2/9/2022 7:28 AM
2. In the 1960s, individuals paid for the majority of their medical care out of pocket. Increased insurance coverage, both
private and public, displaced out-of-pocket spending as the primary source of payment. By 2020, what was the forecasted
percentage amount of health care spending paid by individuals?
a. 6 percent
b. 10.4 percent
c. 11.6 percent
d. 17.4 percent
e. Whatever amount we are currently spending
ANSWER: b
FEEDBACK: a. Incorrect. The amount that individuals paid out of pocket for health care
expenditures declined from 17.4 percent in the 1960s to a forecasted 10.4
percent in 2020, according to Centers for Medicare and Medicaid Services
(CMS.gov).
b. Correct. The amount that individuals paid out of pocket for health care
Page 1
, expenditures declined from 17.4 percent in the 1960s to a forecasted 10.4
percent in 2020, according to Centers for Medicare and Medicaid Services
(CMS.gov).
c. Incorrect. The amount that individuals paid out of pocket for health care
expenditures declined from 17.4 percent in the 1960s to a forecasted 10.4
percent in 2020, according to Centers for Medicare and Medicaid Services
(CMS.gov).
d. Incorrect. The amount that individuals paid out of pocket for health care
expenditures declined from 17.4 percent in the 1960s to a forecasted 10.4
percent in 2020, according to Centers for Medicare and Medicaid Services
(CMS.gov).
e. Incorrect. The amount that individuals paid out of pocket for health care
expenditures declined from 17.4 percent in the 1960s to a forecasted 10.4
percent in 2020, according to Centers for Medicare and Medicaid Services
(CMS.gov).
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: 1-1c - Recent Changes in the Payment Structure
DATE CREATED: 1/24/2022 3:09 AM
DATE MODIFIED: 2/9/2022 7:41 AM
3. When someone mentions the “managed care” approach to health care, what are they referring to? Be sure to include the
term “horizontal integration” in your answer.
ANSWER: Managed care refers to a delivery system that originally integrated the financing and
provision of medical care into one organization. Now the term encompasses different
arrangements designed to coordinate services and control costs, such as an HMO, a PPO,
or a point-of-service plan. Horizontal integration is the process by which this was carried
out, transforming a highly fragmented industry into a single multihospital system.
POINTS: 1
QUESTION TYPE: Essay
HAS VARIABLES: False
STUDENT ENTRY MODE: Basic
LEARNING OBJECTIVES: 1-1b - Recent Changes in Medical Care Delivery
DATE CREATED: 1/24/2022 3:14 AM
DATE MODIFIED: 2/9/2022 7:41 AM
4. The 1974 federal legislation that exempted employers from certain state laws governing health insurance was:
a. COBRA.
b. ERISA.
c. CON.
d. HIPAA.
e. SCHIP.
ANSWER: b
FEEDBACK: a. Incorrect. Passed to regulate the corporate use of pension funds, the Employee
Retirement and Income Security Act (ERISA) of 1974 also exempted self-
insured health plans from state-level health insurance regulations. Today, over
two-thirds of all workers with employer-sponsored insurance are covered by
self-insured plans.
b. Correct. Passed to regulate the corporate use of pension funds, the Employee
Page 2
, Catalog
Chapter_01__U_S__Medical_Care__A_System_at_the_Crossroads·································································· 1
Chapter_02__Health_Care_Spending_Issues····························································································11
Chapter_03__Health_Care_Markets__Can_They_Work_··············································································23
Chapter_04__Welfare_Implications_in_Medical_Markets············································································· 40
Chapter_05__Economic_Evaluation_in_Health_Care·················································································· 53
Chapter_06__Demand_for_Health_and_Medical_Care················································································ 67
Chapter_07__Population_Health···········································································································86
Chapter_08__The_Market_for_Health_Insurance·····················································································100
Chapter_09__Managed_Care············································································································· 117
Chapter_10__The_Physicians__Services_Market······················································································131
Chapter_11__The_Hospital_Services_Market·························································································· 147
Chapter_12__Pharmaceuticals············································································································161
Chapter_13__Medicare·····················································································································181
Chapter_14__Medicaid····················································································································· 200
Chapter_15__Health_Systems_in_High_Income_Countries········································································· 216
Chapter_16__Medical_Care_Reform_in_the_United_States·········································································235
Chapter_17__Lessons_for_Public_Policy································································································250
,Chapter 01: U.S. Medical Care: A System at the Crossroads
1. Charging higher prices for one category of patients in order to provide free or subsidized care to another group is
called:
a. price discrimination.
b. cost shifting.
c. categorical costing.
d. reprehensible and unethical.
e. creative accounting.
ANSWER: b
FEEDBACK: a. Incorrect. Cost shifting is the practice of charging higher prices to one group of
patients, usually those with private health insurance, in order to subsidize the
care of those whose payments do not cover the fully allocated cost of the care
they receive.
b. Correct. Cost shifting is the practice of charging higher prices to one group of
patients, usually those with private health insurance, in order to subsidize the
care of those whose payments do not cover the fully allocated cost of the care
they receive.
c. Incorrect. Cost shifting is the practice of charging higher prices to one group of
patients, usually those with private health insurance, in order to subsidize the
care of those whose payments do not cover the fully allocated cost of the care
they receive.
d. Incorrect. Cost shifting is the practice of charging higher prices to one group of
patients, usually those with private health insurance, in order to subsidize the
care of those whose payments do not cover the fully allocated cost of the care
they receive.
e. Incorrect. Cost shifting is the practice of charging higher prices to one group of
patients, usually those with private health insurance, in order to subsidize the
care of those whose payments do not cover the fully allocated cost of the care
they receive.
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: 1-1a - Emergence of the Modern Medical System
DATE CREATED: 1/24/2022 3:04 AM
DATE MODIFIED: 2/9/2022 7:28 AM
2. In the 1960s, individuals paid for the majority of their medical care out of pocket. Increased insurance coverage, both
private and public, displaced out-of-pocket spending as the primary source of payment. By 2020, what was the forecasted
percentage amount of health care spending paid by individuals?
a. 6 percent
b. 10.4 percent
c. 11.6 percent
d. 17.4 percent
e. Whatever amount we are currently spending
ANSWER: b
FEEDBACK: a. Incorrect. The amount that individuals paid out of pocket for health care
expenditures declined from 17.4 percent in the 1960s to a forecasted 10.4
percent in 2020, according to Centers for Medicare and Medicaid Services
(CMS.gov).
b. Correct. The amount that individuals paid out of pocket for health care
Page 1
, expenditures declined from 17.4 percent in the 1960s to a forecasted 10.4
percent in 2020, according to Centers for Medicare and Medicaid Services
(CMS.gov).
c. Incorrect. The amount that individuals paid out of pocket for health care
expenditures declined from 17.4 percent in the 1960s to a forecasted 10.4
percent in 2020, according to Centers for Medicare and Medicaid Services
(CMS.gov).
d. Incorrect. The amount that individuals paid out of pocket for health care
expenditures declined from 17.4 percent in the 1960s to a forecasted 10.4
percent in 2020, according to Centers for Medicare and Medicaid Services
(CMS.gov).
e. Incorrect. The amount that individuals paid out of pocket for health care
expenditures declined from 17.4 percent in the 1960s to a forecasted 10.4
percent in 2020, according to Centers for Medicare and Medicaid Services
(CMS.gov).
POINTS: 1
QUESTION TYPE: Multiple Choice
HAS VARIABLES: False
LEARNING OBJECTIVES: 1-1c - Recent Changes in the Payment Structure
DATE CREATED: 1/24/2022 3:09 AM
DATE MODIFIED: 2/9/2022 7:41 AM
3. When someone mentions the “managed care” approach to health care, what are they referring to? Be sure to include the
term “horizontal integration” in your answer.
ANSWER: Managed care refers to a delivery system that originally integrated the financing and
provision of medical care into one organization. Now the term encompasses different
arrangements designed to coordinate services and control costs, such as an HMO, a PPO,
or a point-of-service plan. Horizontal integration is the process by which this was carried
out, transforming a highly fragmented industry into a single multihospital system.
POINTS: 1
QUESTION TYPE: Essay
HAS VARIABLES: False
STUDENT ENTRY MODE: Basic
LEARNING OBJECTIVES: 1-1b - Recent Changes in Medical Care Delivery
DATE CREATED: 1/24/2022 3:14 AM
DATE MODIFIED: 2/9/2022 7:41 AM
4. The 1974 federal legislation that exempted employers from certain state laws governing health insurance was:
a. COBRA.
b. ERISA.
c. CON.
d. HIPAA.
e. SCHIP.
ANSWER: b
FEEDBACK: a. Incorrect. Passed to regulate the corporate use of pension funds, the Employee
Retirement and Income Security Act (ERISA) of 1974 also exempted self-
insured health plans from state-level health insurance regulations. Today, over
two-thirds of all workers with employer-sponsored insurance are covered by
self-insured plans.
b. Correct. Passed to regulate the corporate use of pension funds, the Employee
Page 2
