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Health Economics and Financing 5th Edition Getzen Test Bank

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Health Economics and Financing 5th Edition Getzen Test Bank

ISBN-13: 978-1118184905

ISBN-10: 1118184904

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Health Economics and Financing 5th Edition Getzen Test Bank

ISBN-13: 978-1118184905

ISBN-10: 1118184904

 

 

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Free Nursing Test Questions:

 

File: c17; Chapter 17: Economic Evaluation Of Health Policy: The Patient Protection And Affordable Care Act Of 2010

 

 

 

True/False

 

 

 

1)  When analyzing legislative documents, such as the PPACA, it is important to rely on the original text of the document, not on secondary sources (e.g. summaries and overviews by parties with different political affiliations) to form your own independent opinion first.

 

Answer: False

Response:  It is not feasible to read 974 pages within a reasonable amount of time. Instead, it is much more practical to find summaries and overviews that are compiled by independent agencies.

Reference:  17.1 ACA 2010: Description of Main Elements

Level: Easy

 

 

 

2)  According to CBO projections, employer-sponsored health insurance coverage will be significantly eroded by 2021, as a direct result of PPACA implementation.

 

Answer: False

Response:  According to the Table 17.1, the share of employer-sponsored health insurance coverage will remain approximately the same, decreasing by only 2% from 52% to 50%.

Reference:  17.1 ACA 2010: Description of Main Elements

Level: Easy

 

 

 

3)  As of 2014, purchase of health insurance will be mandatory for all citizens, and it will be mandatory for all employers to offer coverage, or face financial penalties.

 

Answer: False

Response:  Not all employers will be required to offer coverage. Small employers will be exempt.

Reference:  17.1 ACA 2010: Description of Main Elements/Coverage Rules

Level: Easy

 

 

 

4)  Under PPACA, each state is required to establish a single statewide health benefit exchange for individuals and small employers by January 2014.

Answer: False

Response:  While it is true that each state must have an exchange by January 2014, the states are not required to commit to just one option of a single statewide exchange. Other options include separate statewide exchanges for individuals and small employers, separate exchanges in different geographical areas of the same state, or regional exchanges (jointly with other states).

Reference:  17.1 ACA 2010: Description of Main Elements/State Health Insurance Exchanges

Level: Easy

 

 

 

5)  The law mandates that each state health insurance exchange must offer at least one “qualified” plan to individuals and small groups.

 

Answer: False

Response:  The law mandates that exchanges offer multiple plans, not just one.

Reference:  17.1 ACA 2010: Description of Main Elements/State Health Insurance Exchanges

Level: Easy

 

 

 

6)  To enforce the “affordable” aspect of the mandatory requirement to have health insurance, there are provisions in the law for low-income families to qualify for premium credits and/or subsidies.

 

Answer: True

Reference:  17.1 ACA 2010: Description of Main Elements/State Health Insurance Exchanges

Level: Easy

 

 

 

7)  All individuals, with no discrimination by age, employment, insurance status, or any other factors, will have the right to purchase a plan through health insurance exchanges.

 

Answer: False

Response:  Individuals who have access to the qualified employer-sponsored health insurance will not be eligible to participate in the exchanges.

Reference:  17.1 ACA 2010: Description of Main Elements/Individuals

Level: Easy

 

 

 

8)  The market that will be most radically transformed under the PPACA is the market for employer-sponsored health insurance.

 

Answer: False

Response:  It is the market for individual health insurance that will be most radically transformed.

Reference:  17.1 ACA 2010: Description of Main Elements/Individuals

Level: Easy

 

 

 

9)  Suppose annual premiums for the silver plan in the health insurance exchange in your geographical area will be established at $5,000 in 2014.  If your individual income will be $40,000 in 2014 and you will be eligible to buy health insurance through that exchange, you will qualify for a premium credit.

 

Answer: True

Response:  Affordability threshold for health insurance premiums in PPACA is established at 9.5%. Your contribution to premiums will be $40,000 x .095 = $3,800, and the remaining $1,200 will be picked up by the government.

Reference:  17.1 ACA 2010: Description of Main Elements/Individuals

Level: Medium

 

 

 

10)  The PPACA legislation can be viewed as an attempt by the US government to provide universal health insurance coverage to all citizens and legal residents in the U.S.

 

Answer: False

Response:  In spite of all the expected expansions in coverage, coverage will not yet be universal, as there will be a few categories of people who will deliberately choose not to buy insurance.

Reference:  17.1 ACA 2010: Description of Main Elements/Still Uninsured: The Undocumented, and some other Outsiders

Level: Medium

 

 

 

11)  For the federal government, the major problem with macro affordability is that the healthcare expenditures growth rate greatly exceeds the growth rate in the available income (GDP). This implies that if the current growth trends continue without change, spending on healthcare will become unsustainable.

 

Answer: True

Reference:  17.2 Statement of the Problem: Affordability/Macro Affordability: The Growth Gap

Level: Medium

 

 

 

12)  The design of the PPACA legislation uses several historical experiments with innovative healthcare financing as models, because of the positive outcomes observed from those experiences. The generalizability of those outcomes for the entire country, however, is less certain and the actual impact of PPACA legislation may vary greatly from the expected targets.

 

Answer: True

Reference:  17.3 Using Existing Plans as Models

Level: Easy

 

 

 

Multiple Choice

 

 

 

13)  Which population category will be primarily affected by the major changes that PPACA envisions?

  1. a) current Medicare enrollees
  2. b) current Medicaid enrollees
  3. c) current enrollees in employer-sponsored health insurance plans
  4. d) the uninsured and enrollees of individual health insurance plans
  5. e) Federal employees

 

Answer: d

Reference:  17.1 ACA 2010: Description of Main Elements

Level: Easy

 

 

 

14)  Listed below are some of the most important new coverage rules under PPACA. Some of them aim to achieve greater efficiency, others aim to achieve greater equity. Which coverage rule from the list below aims to achieve better efficiency?

  1. a) All pre-existing conditions must be covered in full
  2. b) Limited deductibles
  3. c) Eligibility and electronic claims submission standards
  4. d) No dollar limit on benefits
  5. e) Guaranteed renewal

 

Answer: c

Reference:  17.1 ACA 2010: Description of Main Elements/Coverage Rules

Level: Medium

 

 

 

15)  Listed below are some of the most important new coverage rules under PPACA. Some of them aim to achieve greater efficiency, others aim to achieve greater equity. Which coverage rule from the list below aims to achieve better equity?

  1. a) Medical loss ratios
  2. b) Uniform benefits descriptions
  3. c) Insurers are allowed to increase premiums with age and for tobacco users.
  4. d) Mandated coverage (penalty tax)
  5. e) Preventive services must be covered at no cost to the patient

 

Answer: b

Reference:  17.1 ACA 2010: Description of Main Elements/Coverage Rules

Level: Medium

 

 

 

16)  Suppose annual premiums for the silver and gold plans in the health insurance exchange in your geographical area will be established at $5,000 and $7,000 respectively in 2014, your individual income will be $40,000 in 2014 and you will be eligible to buy health insurance through that exchange. If you decide to buy the gold plan, your contribution to the premium cost will be

  1. a) $7,000
  2. b) $5,800.
  3. c) $5,000.
  4. d) $3,800.
  5. e) $1,200.

 

Answer: b

Response:  Affordability threshold for health insurance premiums in PPACA is established at 9.5%. For you, this amounts to $40,000 x .095 = $3,800. The government will issue a premium credit for the difference between this amount and the price of the silver plan: $1,200. If you apply this credit towards the cost of the gold plan, your remaining balance will be $7,000 – $1,200 = $5,800.

Reference:  17.1 ACA 2010: Description of Main Elements/Individuals

Level: Medium

 

 

 

17)  The anticipated benefits of health insurance exchanges include all of the following except

  1. a) lower (compared to the market for individual health insurance) prices.
  2. b) better (compared to the market for individual health insurance) coverage.
  3. c) simplified (compared to the market for individual health insurance) administrative procedures and lower administrative costs.
  4. d) readily available and standardized information, allowing for easy comparison of plans.
  5. e) lower (compared to the market for individual health insurance) wait times for medical examinations.

 

Answer: e

Response:  Medical examinations will not be required when purchasing through health  insurance exchanges.

Reference:  17.1 ACA 2010: Description of Main Elements/Individuals

Level: Medium

 

 

 

18)  Income distribution, and thus the ability to afford healthcare, is highly skewed in the U.S. The current nature of income distribution implies that average household income is _______________ median household income.

  1. a) significantly less than
  2. b) significantly greater than
  3. c) always equal to
  4. d) only infrequently equal to
  5. e) completely unrelated to

 

Answer: a

Reference:  17.2 Statement of the Problem: Affordability/ Rising Costs Slowly Create a Crisis

Level: Medium

 

 

 

19)  Which of the following examples of states, plans and programs – which had experimented with different forms of healthcare financing in the past – were not used as models when designing the PPACA legislation?

  1. a) the Massachusetts healthcare law
  2. b) the Oregon experiment with Medicaid expansion
  3. c) the Hawaiian experiment with mandated employer coverage
  4. d) Federal Employees Health Benefits Plan
  5. e) the first HMO: Kaiser Health Plan

 

Answer: e

Reference:  17.3 Using Existing Plans as Models

Level: Easy

 

 

 

20)  Which of the following is not an example of an issue left unresolved by PPACA?

  1. a) There is no guarantee the distribution of health insurance will be 100% equitable.
  2. b) The standard package of “essential benefits” has not yet been precisely defined by the law, and is still left for individual states to determine.
  3. c) The law will greatly reduce, but not completely eliminate the number of uninsured.
  4. d) The law does not provide a clear mechanism for medium-size employers to access affordable health insurance.
  5. e) It is still not quite clear how the costs of the reform will be distributed between different societal groups.

 

Answer: d

Response: The law does provide the mechanism for medium-size employers to access affordable insurance. What is not clear about the medium-size employers is which option they will end up choosing, as they face a variety of both positive and negative incentives.

Reference:  17.4 Unresolved Issues

Level: Medium

 

 

For Questions 21-24

Use the information below to answer questions 21 through 24 and ultimately make a prediction about which insurance option is likely to be selected by Consultants, Inc., a family-run business with 68 employees, providing anesthesia services on “as-needed” basis to hospitals and ambulatory surgical centers in a large metropolitan area.

Consultants, Inc. has been in business for 8 years, offering one generous health insurance plan and sponsoring 60% of premium contribution ($2,900) for each of the 49 employees that chose to participate. Their plan, however, will not meet the minimum essential benefits requirements under the PPACA, and after January 1, 2014 the firm will face the following choices:

 

Option 1: No insurance.

The firm will face fines: $2,000 per each employee, starting with the 31st worker

 

Option 2: Better Insurance: purchase a conforming plan through the health benefits exchange. Estimated cost per employee (60% contribution toward the total premium of $6,000) is $3,600, 57 employees are expected by the firm to participate.

 

Option 3: Old insurance

Since it is likely that at least one of the workers who cannot afford this insurance will try to obtain it through the exchange, the employer is likely to face the same fines as in Option 1, in addition to paying part of the premiums for participating workers.

 

21)  What will be the estimated cost of Option 1: not offering insurance at all?

  1. a) $0
  2. b) $76,000
  3. c) $142,100
  4. d) $205,200
  5. e) $218,100

 

Answer: b

Response: Option 1: No insurance.

Employer Premiums: $0

Fines:                                                              $2,000 per each employee, starting with the 31st worker:

$2,000 x 38 = $76,000

                                                                                                                                                                                                                                                                                                Total: $76,000

Reference:  17.1 ACA 2010: Description of Main Elements/Employers: Positive and Negative Incentives to Provide Benefits

Level: Medium

 

 

 

22)  What will be the estimated cost of Option 2: purchasing a conforming plan through the exchange?

  1. a) $0
  2. b) $76,000
  3. c) $142,100
  4. d) $205,200
  5. e) $218,100

 

Answer: d

Response: Option 2: Better Insurance: purchase a conforming plan through the health benefits exchange.

Estimated cost per employee (60% contribution toward the total premium of $6,000) is $3,600, 57 employees are expected by the firm to participate.

Employer Premiums: $3,600 x 57 = $205,200

Fines:                                                              $0

                                                                                                                                                                                                                                                                                                Total: $205,200

Reference:  17.1 ACA 2010: Description of Main Elements/Employers: Positive and Negative Incentives to Provide Benefits

Level: Medium

 

 

 

23)  What will be the estimated cost of Option 3: staying with the old insurance?

  1. a) $0
  2. b) $76,000
  3. c) $142,100
  4. d) $205,200
  5. e) $218,100

 

Answer: e

Response: Option 3: Old insurance

Since it is likely that at least one of the workers who cannot afford this insurance will try to obtain it through the exchange, the employer is likely to face the same fines as in Option 1, in addition to paying part of the premiums for participating workers.

Employer Premiums: $2,900 x 49 = $142,100

Fines:                                                              $2,000 per each employee, starting with the 31st worker:

$2,000 x 38 = $76,000

                                                                                                                                                                                                                                                                                                Total: $218,100

Reference:  17.1 ACA 2010: Description of Main Elements/Employers: Positive and Negative Incentives to Provide Benefits

Level: Medium

 

 

 

24)  Which option is likely to be selected by Consultants, Inc. in the year 2014?

  1. a) No insurance.
  2. b) Old insurance.
  3. c) Better insurance.
  4. d) Since the costs of staying with the old insurance and not offering insurance at all are identical, and the conforming plan, while more expensive, will bring a lot of employee loyalty gained through the provision of benefits, the firm will be indifferent between the three choices, i.e. equally likely to select any option.
  5. e) The firm is likely to outsource 18 employees (all employees in excess of 50) to contractors in order to be considered as a small employer and avoid the requirement to provide health insurance under PPACA.

 

Answer: c

Response: Even though option (a) is the least expensive, it is not likely to be chosen, as the firm has already determined in the past that providing benefits to attract employees is worthwhile. Option (c) is both less expensive than option (b), and is better in terms of benefits offered. Option (d) is not correct (all options have different costs), and option (e) is highly unlikely, as the firm has already determined in the past that providing benefits to attract employees is worthwhile.

Reference:  17.1 ACA 2010: Description of Main Elements/Employers: Positive and Negative Incentives to Provide Benefits

Level: Difficult

 

 

 

Essay

 

25)  Why does the law allow for a significant variety in the types of “qualified” plans that can be offered by health insurance exchanges? Wouldn’t it be less expensive for the states (in terms of administrative costs) to offer just one standard plan of essential benefits to everyone?

 

Answer: It is true that administrative costs of offering just one plan will be lower, when compared to the cost of offering multiple plans. However, not only costs but also benefits of alternative options should be considered when taking decisions. Offering multiple plans, though at a somewhat higher cost, should be more in line with the preferences of many American consumers who like having the ability to choose among various options. The “one-size-fits-all” model is not likely to work in health insurance. Consumers with different preferences, health statuses and incomes will receive significant benefits from the ability to customize their insurance options. Those benefits must be outweighing the costs, since as many as five tiers of coverage are featured in the legislation.

Reference:  17.1 ACA 2010: Description of Main Elements/State Health Insurance Exchanges

Level: Difficult

 

 

 

26)  Is there an inconsistency in the following figures: healthcare costs comprise about 18% of the national income, however, the PPACA legislation sets the limit for individuals’ spending on health insurance premiums as 9.5% of their incomes, with government credits covering the remainder. Where would the rest of the financing come from? Discuss.

 

Answer: Such a financial design necessarily implies cost shifting. It means that some, more affluentRemember,cietal groups will have to contribute more than 9.5% of their incomes, to cover medical expenses of the low-income population.

Reference:  17.4 Unresolved Issues

Level: Easy 

 

 

 

27)  Consider the market for health insurance for medium-size employers (50-100 employees) after January 1, 2014. Under the PPACA, such employers will be subject to penalties if they don’t offer health insurance to their workers, and health insurance exchanges should be able to present an attractive option for them to offer coverage. At the same time, an alternative opportunity to buy coverage outside of the state exchanges will still remain.

Keeping in mind that premiums for each employer group will depend on the average age of the entire pool of employees and some companies may tend to have a primarily older (or younger) workforce, discuss the potential impact of this policy on both markets: within vs. outside of health insurance exchanges. Are adverse selection issues likely to arise in any of these markets? Justify your answers.

 

Answer: Young and healthy groups are always targeted by health insurers, and competition to attract those groups is likely to be strong. According to multiple studies (Corlette, n.d., Davis, 2011, National Association of Insurance Commissioners, 2012), it is likely that private markets outside of the state exchanges will be more successful in attracting those groups, while the groups with a relatively older and sicker workforce will have no other option other than using the exchange. Thus, if exchanges will be used primarily by older and more expensive groups, while private markets will be used primarily by younger, healthier and less expensive groups, state exchanges will become “victims of adverse selection” (Jost, T., 2010), while private markets will enjoy the perks of positive selection. These issues will then have to be addressed by federal and state legislatures, and tools will need to be developed to reduce adverse selection and to make certain that health insurance exchanges prevail in the long run.

 

References:  17.1 ACA 2010: Description of Main Elements/Employers: Positive and Negative Incentives to Provide Benefits

Corlette, S. (n.d.) Small Business Health Options Program (SHOP).  American Cancer Society, Cancer Action Network. http://www.acscan.org/pdf/healthcare/implementation/background/

SmallBusinessHealthOptionsProgram.pdf

David, S. (2011). Threat of Adverse Selection Raises Fears On Viability of Markets Outside Exchanges. AIS’s Health Reform Week, 2(14). http://aishealth.com/archive/nref042511-02

Jost, T. (2010) Health Insurance Exchanges and the Affordable Care Act: Key Policy Issues. Commonwealth Fund. http://www.commonwealthfund.org/Publications/Fund-Reports/2010/Sep/Health-Insurance-Exchanges-and-the-Affordable-Care-Act.aspx

National Association of Insurance Commissioners (2012). Adverse Selection Issues and Health Insurance Exchanges Under the Affordable Care Act. http://www.naic.org/store/free/ASE-OP.pdf

Level: Difficult

 

 

 

28)  When state health insurance exchanges become effective in 2014, low-income individuals will qualify for premium credits and/or subsidies, where the amount of credit or subsidy will be determined individually for each person and depend solely on his or her income. Consider the following example: to obtain health insurance coverage effective throughout the year 2015, an individual would be shopping for it in the year 2014, which means he or she will be providing their tax returns for the year 2013 as an evidence of income level.

Do you see any potential problems arising from such a significant time lag between the date of income evidence and the dates of effective coverage? Should the most recent tax returns be the only acceptable proof of income, to qualify for premiums credits?

 

Answer: Low-income individuals are likely to be prone to significant and/or frequent fluctuations in income. Thus, as highlighted by Graves (2012), there is a high likelihood that for many individuals income level may change during the two-year period, which may change their eligibility for premium credits and/or subsidies. Relying exclusively on the two-year-old tax documents may lead to an incorrect amount of financial assistance provided and thus result in inefficiencies. That is why the law does allow the use of additional tools to better capture the current income level of the applicants when applicants report a significant change in income since the date of the most recent tax return. Graves (2012) offers a detailed discussion of the possible methods to optimize both the amount of government payments and the application process itself.

 

References:  17.1 ACA 2010: Description of Main Elements/Individuals

Graves, J. (2012). Better Methods Will Be Needed To Project Incomes To Estimate Eligibility For Subsidies In Health Insurance Exchanges. Health Affairs 31 (7):1613-1622

Level: Medium

 

 

 

29)  Discuss the pros and cons of price transparency policies in the healthcare industry. Should it become a requirement for all medical providers to publish prices for their service on the webRemember, that patients are fully informed about prices before they actually receive care, not after (as it is usually the case today). Or, do costs outweigh benefits? Justify your answers.

 

Answer:  Price transparency, and perfect information in general, are usually considered to be of great value to consumers in most markets in the economy, since it allows consumers to be fully informed purchasers of goods and services. It is a different situation in the healthcare industry, however, because consumers will never be and, in most cases, will never want to be fully informed purchasers due to the complicated nature of the medical care they buy.

Additionally, price transparency might be difficult to achieve due to the presence of third parties (insurers and government) who pay the bulk of healthcare costs and widely spread price discrimination practices associated with multiple purchasers. Finally, price transparency would make it difficult to continue cost shifting, which is beneficial for  society as it allows providing medical care to those who are least able to afford it. Many of those who are currently paying “for someone else too” might not be directly aware of it and might withdraw their support once the true price structure is known to them.

Thus, even though full information about prices might bring certain benefits to consumers and third parties who pay for healthcare, it is likely that society as a whole will gain more from the lack of such.

 

Reference:  17.4 Unresolved Issues/Price Transparency: A Conspiracy of Silence

Level: Difficult

 

 

 

30)  What is the most important takeaway from Dr.Getzen’s analysis of the PPACA legislation?

 

Answer: Dr. Getzen’s analysis is an attempt to highlight the following two important points.

PPACA is not meant to be a comprehensive attempt to fix the current problems in healthcare access and affordability, and there is no guarantee that envisioned reforms will be certain to succeed. The law is neither perfect nor comprehensive.

However, it is a very important first step, indicating that changes must happen, even though they would be painful, as sacrifices will have to be made by everyone. It signifies that reforms will indeed have to happen, and many of the exact details of those reforms still remain to be crafted along the way.

Reference:  17.4 Unresolved Issues

Level: Difficult

 

 

 

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