HEALTH ECONOMICS MIDTERM 1
CORRECT 100%
Why has health care spending increased as a share of GDP over time? - ANSWER-
Share of NHE was 17.8% of GDP. Expected to rise.
Reasons this share has increased over time?
1.) more health care services are being bought.
2.) higher quality services using the latest technology are being purchased.
3.) health care prices have grown faster than other prices.
Why is health care different? - ANSWER1.) uncertainty.
-Demand Side: how much will i spend on health care this year?
-Supply Side:
what is the best treatment?
2.) insurance: health care is very uncertain and expensive; therefore, people want
insurance to protect them from this uncertainty and risk. Having insurance changes
incentives. More attention is now being paid to costs but patients may only care
about what they have to pay.
3.) information problems. Do people understand disease, options, treatment? Do
physicians act as perfect agents on behalf of patients? Do people face all incentives
associated with their decisions?
4.) Restrictions on Competition: license requirements ensure a measure of quality
but impose higher costs. Patents on drugs give manufacturers monopoly profits for a
short period of time.
5.) role of equity or need.
6.) nonprofit firms
7.) public provision of health care.
What shifts healthcare supply and demand? - ANSWERDemand
-income
-other prices
-insurance
-tastes
Supply
-technological change
-input prices
-production prices-related goods
-size of the industry
CORRECT 100%
Why has health care spending increased as a share of GDP over time? - ANSWER-
Share of NHE was 17.8% of GDP. Expected to rise.
Reasons this share has increased over time?
1.) more health care services are being bought.
2.) higher quality services using the latest technology are being purchased.
3.) health care prices have grown faster than other prices.
Why is health care different? - ANSWER1.) uncertainty.
-Demand Side: how much will i spend on health care this year?
-Supply Side:
what is the best treatment?
2.) insurance: health care is very uncertain and expensive; therefore, people want
insurance to protect them from this uncertainty and risk. Having insurance changes
incentives. More attention is now being paid to costs but patients may only care
about what they have to pay.
3.) information problems. Do people understand disease, options, treatment? Do
physicians act as perfect agents on behalf of patients? Do people face all incentives
associated with their decisions?
4.) Restrictions on Competition: license requirements ensure a measure of quality
but impose higher costs. Patents on drugs give manufacturers monopoly profits for a
short period of time.
5.) role of equity or need.
6.) nonprofit firms
7.) public provision of health care.
What shifts healthcare supply and demand? - ANSWERDemand
-income
-other prices
-insurance
-tastes
Supply
-technological change
-input prices
-production prices-related goods
-size of the industry
