LSUS MHA 710 Economics Exam 1, 2, 3, & 4 New
Latest Version Best Studying Material with All
Questions and Answers
Exam 1
How are healthcare products both outputs and inputs? Can you give an example? ------------
Correct Answer ------------ Products (goods and services are considered products) are commonly
both inputs and outputs. For example, a surgical tool is an input into a surgery and an output of a
surgical tool company. Similarly, the surgery itself can be considered an output of the surgical
team or an input into the health of the patient.
What is a life year? And what is it used for in the context of this chapter? ------------ Correct
Answer ------------ One additional year of life. It can equal one added year of life for an
individual or an average of 1/nth of a year of life for n people. An example is spending $1
million by reducing childhood obesity and saving thousands of lives or using if for colonoscopies
in 81 year old african american men and saving few lives.
What are examples of interventions that have the most impact on life years and those that have
less impact? ------------ Correct Answer ------------ Interventions with the most include
antismoking, reducing childhood obesity, and multidisciplinary measurement of heart failure.
Interventions with the least include colonoscopies for african american men who are 81 or 76
and multidisciplinary heart failure measurement with exercise.
How does healthcare spending per person in the US compare to other countries? ------------
Correct Answer ------------ US spends far more per person on healthcare than any other large
countries.
How does US life expectancy at birth compare to other countries? ------------ Correct Answer ----
-------- 27 out of 34 of the OECD countries (bad!)
According to Grossman (1972), how is the demand for medical care determined? ------------
Correct Answer ----------- It is derived from the demand for health.
The concept of quality-adjusted life year (QALY): ------------ Correct Answer ----------- is used
extensively to evaluate medical care resource allocation within government-run programs on
fixed budgets, especially in Europe.
Which is of the following measures of effectiveness is an intermediate measure? ------------
Correct Answer ----------- Hip Fracture
When measuring the effectiveness of a treatment, surrogate measures reflect clinical efficacy and
,include: ------------ Correct Answer ----------- bone-mass density (BMD)
Which of the following is least responsible for the reduction in mortality rates in Europe and
North America? ------------ Correct Answer ----------- More effective medical interventions.
A physician's ability to induce demand is greatly enhanced when: ------------ Correct Answer -----
------ patients have difficulty gathering and processing information.
Which of the following would likely lead to the greatest improvement in the health status of the
population in the United States? ------------ Correct Answer ----------- Improved lifestyles
changes
The direct costs in an economic evaluation include all of the following except: ------------ Correct
Answer ----------- reduced productivity at work.
Has the US achieved the same increases in life expectancy relative to their changes in spending
as in other countries? ------------ Correct Answer ------------ From one perspective, this increase
in life expectancy reflects impres-sive performance. From another, it does not compare well to
the performance of other industrialized countries. For example, French life expectancy at birth
rose from 79.2 years in 2000 to 82.4 years in 2015, and costs increased less than half as much in
France as in the United States
Why might we want to measure healthcare spending as a share of GDP instead of just healthcare
spending per person? ------------ Correct Answer ------------ What appears to be higher spending,
however, might just be the effects of inflation. To avoid inaccuracies resulting from changes in
the value of money, economists use two strategies. The simplest and most reliable strategy to
report spend-ing uses shares of national income, or gross domestic product (GDP). This
examination of shares removes the effects of inflation
What does inflation measure? ------------ Correct Answer ------------ Changes in level of price or
goods over time
How have expenditures by healthcare sector changed since 2000? ------------ Correct Answer ----
-------- Hospitals' share of total spending has risen by 2.0 percent since 2000, reflecting the
continuing consolidation of services into health systems. Rapid increases in prices and intensity
(which we cannot separate at this point) explain most of this increase. Spending on
pharmaceuticals has risen sharply. spending for physicians' services claims nearly a fifth of total
spending. The share has fallen since 2000 resulting from consolidation into systems and
increasing spending on pharmaceuticals. steady decline in the share of direct consumer payments
for healthcare. Broader and more complete insurance coverage explains this trend. Rapid
expansion of the healthcare sector has been a feature of American life for most of this century,
but its pace has clearly slowed. healthcare spending in 2000 claimed 12.5 percent of national
income. By 2016, it had risen to 17.2 percent of national income. However, in contrast to the
rapid expansion of previous years, the share plateaued between 2009 and 2013.
What is "economics"? ------------ Correct Answer ------------ A Map for decision making.
,Economics analyzes the allocation of scarce resources.
What are some of the specific challenges faced by managers in healthcare? ------------ Correct
Answer ------------ 1. The central roles of risk and uncertainty
2. The complexities created by insurance
3. The perils produced by information asymmetries
4. The problems posed by not-for-profit organizations
5. The rapid and confusing course of technical and institutional change
What does asymmetric information mean? Can you give an example? ------------ Correct Answer
------------ When one party in a transaction has less information than the other party. For
example, physicians and other healthcare providers usually understand patients' medical options
better than patients do. Unaware of their choices, patients may accept recommendations for
therapies that are not cost-effective or, recognizing their vulnerability to physicians' self-serving
advice, may resist recommendations made in their best interest.
What is adverse selection? ------------ Correct Answer ------------ A situation that occurs when
buyers have better information than sellers. For example, high-risk consumers are willing to pay
more for insurance than low-risk consumers are. (Organizations that have difficulty
distinguishing high-risk from low-risk consumers are unlikely to be profitable.)
What is the problem of scarcity? ------------ Correct Answer ------------ Demand for a good or
service is greater than the availability
What does it mean to say people are assumed to make choices rationally? ------------ Correct
Answer ------------ focuses on individuals' efforts to best realize their goals, given their resources.
What does it mean to says resources are scarce? ------------ Correct Answer ------------ Anything
useful in consumption or production that has alternative uses.
What is opportunity cost? ------------ Correct Answer ------------ Potential loss from a missed
opportunity. Passing up the next best choice.
What does "marginal" refer to? ------------ Correct Answer ------------ The examination of the
costs and benefits through a small change in the production of goods
What does efficiency refer to? ------------ Correct Answer ------------ No way to rearrange
production of goods in a way that makes one person more better off without making somebody
else worse off. How well an economy uses scare resources to meet the needs/wants of their
customers
How do positive economic statements differ from normative economic statements? ------------
, Correct Answer ------------ Positive economics is objective while normative economics is
subjective. Facts/ What is vs What should be
How can economics be applied to the health sector? ------------ Correct Answer ------------
Describe, Explain, Evaluate, Plan
As we progress through the chapters, think about the special characteristics that apply to the
health sector that might limit the applicability of traditional economic models. ------------ Correct
Answer ------------ Social determinants of health, few insurance companies that providers rely on,
not a perfectly competitive market
What are some of the disruptive changes happening in the healthcare system? ------------ Correct
Answer ------------ rapid technological change,
the shrinking share of direct consumer payments,
the rapid growth of the healthcare sector,
the rapid growth of the outpatient sector,
the slower growth of the inpatient sector,
the steady increase in the number of uninsured Americans.
Only 3 have had no changes including: rapid technological change, the shrinking share of direct
consumer payments, and slower growth of the inpatient sector. ACA was very disruptive.
What is a deductible? ------------ Correct Answer ------------ The amount a consumer must pay
before insurance covers any healthcare costs.
What are out-of-pocket payments? ------------ Correct Answer ------------ Money a consumer
directly pays for a good or service.
How has the share of direct payments by consumers changed over time? ------------ Correct
Answer ------------ Decreasing due to these caps
Chapter 1 Key Concepts ------------ Correct Answer ------------ Economics helps managers focus
on key issues.
Economics helps managers understand goal-oriented decision making.
Economics helps managers understand strategic decision making.
Economics gives managers a framework for understanding costs.
Economics gives managers a framework for understanding market demand.
