Final Exam

StudyBlue printing of Final Exam html, body, div, span, applet, object, iframe, h1, h2, h3, h4, h5, h6, p, blockquote, pre, a, abbr, acronym, address, big, cite, code, del, dfn, em, font, img, ins, kbd, q, s, samp, small, strike, strong, sub, sup, tt, var, b, u, i, center, fieldset, form, label, legend, table, caption, tbody, tfoot, thead, tr, th, td { margin: 0; padding: 0; border: 0; outline: 0; font-size: 100%; background: transparent; } body { line-height: 1; } blockquote, q { quotes: none; } blockquote:before, blockquote:after, q:before, q:after { content: ''; content: none; } /* remember to define focus styles! */ :focus { outline: 0; } /* remember to highlight inserts somehow! */ ins { text-decoration: none; } del { text-decoration: line-through; } /* tables still need 'cellspacing="0"' in the markup */ table { border-collapse: collapse; border-spacing: 0; } /* end RESET */ .header { min-width:800px; } .logo { padding:6px 20px 2px 20px; margin:0; font-size:25px; font-weight:bold; color:#808285; position:relative; border-bottom: 1px solid #c5c5c5; } .logo-blue { color:#70adc4; } .logo-desc { font-weight:normal; font-size:19px; color:#cccccc; margin-top:50px; position:absolute; display: none; } .back-button { position:absolute; top:20px; right:20px; font-size:13px; line-height:25px; color:rgb(0,175,225); font-weight:normal; } .back-button a { color:rgb(0,175,225); } .instructions { padding:0; margin:0; width:100%; position:relative; color:rgb(100,100,100); } .step-holder { border-left:1px solid #ededed; margin-left:20px; } .steps { padding:15px 0; float:left; width:24%; border-right:1px solid #ededed; text-align:center; } .steps-01 { } .steps-02 { } .steps-03 { } .steps-04 { } .label { padding:5px 10px; } .print-button { } .print-button a { background-color:rgb(0,175,225); color:white; line-height: 19px; padding:9px 8px 5px 30px; font-size:14px; text-decoration:none; background-image: url(images/printer.png); background-repeat: no-repeat; background-position: 7px 50%; -moz-border-radius: 5px; -webkit-border-radius: 5px; } .print-button a:hover { background-color:black; } .theNote .content { width: 8.0in !important; margin: 5px auto; padding:20px; background-color:white; } .theNote .header { border-bottom: 1px dashed #C8C8C8; font-size: 17px; padding: 0 0 10px; line-height: 19px; color: #00ADE1; min-width:500px; } .theNote .body { font-size: 14px; line-height: 19px; padding: 10px 0; } .theNote{ padding:6px 0; clear:both; background-color: rgb(200,200,200); } .theNote h3{ color: rgb(100,100,100); } .theNote h1, .theNote h3{ background-color:white; padding:2px 20px; width:8.0in !important; margin: 0 auto; font-size: 15px; } .theNote h1{ padding-top: 10px; font-size: 15px; } .theNote h1:first-child{ font-size: 20px; } .theNote h3 { font-size: 14px; font-weight: normal; } #options { border: 3px double #ccc; padding: 5px 12px; margin: 10px 50px 10px 20px; float: left; } #info { border-top: 1px solid #ccc; padding-top: 5px; font-style: italic; } li { margin: 5px 10px 5px 25px; } ul li { list-style: disc; } ol li { list-style: decimal; } img { border: 0; } table { clear: both; width: 100%; border: 1px solid #c5c5c5; border-width: 1px 0; margin: 0; page-break-after: always; } table#page { page-break-after: auto; } td { text-align: center; font-size: 12px; border-bottom: 1px dashed #c5c5c5; height: 1.75in; width: 50%; padding-left: 15px; } .leftside { border-right: 1px solid #cccccc; padding: 0 15px 0 0; } .bottom td { border-bottom: none; } .clearfix { clear:both; line-height:1px; height:1px; } img { max-width:80%; max-height:150px; margin:20px; } @media print {.header { display: none; } .content .header{ display:inherit; } table { border: 1px dashed #bbb; border-width: 1px 0; } .theNote{ background-color:white; } } Chapter 9, 10 and 16 Final Review Questions Chapter 9 1. Explain the two opposing theories regarding the reasons for Government regulations. PUBLIC INTEREST THEORY- • Gov. promotes the general interest of society as a whole • Chooses policies that promote efficiency and equity • The gov. finds the best way possible to fix the problem SPECIAL INTERST GROUP THEORY- • Gov. process where wealth is redistributed among individuals and groups. It redistributes wealth from the general public to certain special interest groups AND IN RETURN, politicians expect votes and support. • Promotes self-interest, but NOT public interest 2. List and explain the instruments government uses to correct externalities. WAYS TO CORRECT EXTERNALITIES: REGULATION- Taxes and subsidies can be used to alter the price of a good. For example, when it is negative/harmful, a tax on the activity OR when it is positive/beneficial, a subsidy. Negative Externality – Market produces too much Positive Externality – Market produces too little 3. Is there a market solution for externalities? Explain. Yes- when the market can automatically correct any externalities because those who are harmed and those who benefit from the activity bargain and come to an agreement. 1) clear and specific property rights 2) those involved must have an equal amount of bargaining power 3) the transaction costs must be low EXAMPLE: SMOKER VS. NONSMOKER 4. What is the income redistributive function of government? VERTICAL EQUITY- Ppl with higher incomes are treated differently than those with lower incomes HORIZONTAL EQUITY- Equals should be treated equally where ppl with the same income should pay the same amount of taxes 6. Are quality regulations effective? (Do they always result in improving efficiency? Hint: Consider licensing. (graph in notes!!!) ***Regulations aimed at employees usually means higher costs of production!! This shifts the supply curve to the left and shifts the demand curve to the right If there is a LITTLE shift in the demand curve, then improvement was NOT worth it. If there is a BIG shift in the demand curve, then there is a positive benefit. 7. Do price ceilings improve efficiency? Demonstrate and discuss. No- results in a shortage of goods and services! Also, long waiting lines, rationing, and it is NOT efficient. Chapter 10 1. Be familiar with the Medicare and Medicaid programs. MediCARE: 65+ 4 parts- A) Hospitalization B) Supplementary, out of hospital, paid positions- physicians C) Medicare advantage program (more choice) D) Voluntary Drug Program MediCAID: Poor and low income, the certain basic medical benefits that are provided… Inpatient and outpatient services Physican services Prenatal care Vaccines for children 2. Be familiar with recent Medicare reforms including DRGs, Resource Based Relative Value Scale system. Medicare volume performance standards, outcomes research and practice guidelines. MediCARE reforms: 1) DRG’s for hospitals (part A) prospective system for hospitals 2) RBRVS (part B) price controls on doctors 3) Volume performance system (part B) expenditure limits 4) ORPG – contain the growth of physician and hospital expenditures by decreasing the uncertainty about alternative medical treatments Chapter 16 1. Analyze the reform efforts at the state level. There is an enormous amount of diversity across the states. Politics are very complicated at the state level. Actually applying and “doing” the health reform is more difficult than it looks. For example, Oregon established a process where they total their budget every year and whatever they have left is what they use, their reform efforts were very honest and straight forward. Massachusetts developed made a reform effort, but it failed, instead of saving money, they lost money. 2. Discuss the 4 proposals for reform at the national level. There is so much disagreement about how the reform efforts should take place, but the 4 proposals developed help sort through issues and focus on efficiency and equity: Managed competition, national health insurance, medical savings account, and individual mandates. They include the basic elements of most proposals usually considered. 3. Use economic theory to explain how employees end up paying for at least a portion of mandated health insurance in terms of forgone wages. Demand goes down and the curve shifts to the left and wage goes down! 4. Discuss the health care reform bill passed in March 2010. Make sure you demonstrate which aspects of the bill are reflected in the 4 health care reforms at the national level (number 2, above.) In the reform bill there are different aspects that involve individual mandate, managed competition, and control quality, which has an affect on price.. There is parental coverage until 26 years old, which will have an increase in health care. Also, there is prevention of cancelling insurance, which was already active, but insurance companies were not following the rules and doing that. Sally Pipes, “Ten Myths…” 1. List and then discuss Pipes suggested solutions for addressing the problems of U.S. health care. Sample Comprehensive Questions 1. Consider the American health care system. Would you consider national health insurance (i.e. like that of Canada or England) as a promising improvement in the US? Fully discuss. Make sure your answer considers the likely effects upon allocative and production efficiency. Don’t forget to consider moral hazard, alternative theories of government regulation and other relevant issues in your answer. 2. Suppose that national health insurance is not an option. With that the case, what types of reforms would you support? NOTE: Use economic analysis to defend your position. Incorporate what you have learned throughout the class to answer this question. Note: In preparation for the final exam, students will be rewarded for reviewing the concepts listed below. You WILL be required to demonstrate a knowledge of these terms: The economic effects of price controls, the public interest theory of government regulation and the special interest theory of government regulation, adverse selection, scale economies, marginal cost and marginal benefit, cost-benefit analysis, externalities, the difference between the U.S. health system and a single payor system, like Canada’s, etc., monopoly and competitive market structures. Some of these concepts will be helpful in answering the last two questions.