Understanding Market Failures and Cost-Effectiveness in Health Care Economics, Exams of Nursing

Download Understanding Market Failures and Cost-Effectiveness in Health Care Economics and more Exams Nursing in PDF only on Docsity! NURS 664 Economics of Health Care Q & A w/ Rationales 204 1. Which of the following best describes the concept of supply and demand in healthcare economics? a. Supply refers to the quantity of healthcare services available, while demand represents the desire and ability of consumers to access those services. b. Supply refers to the number of healthcare providers, while demand represents the quantity of healthcare resources available. c. Supply represents the cost of healthcare services, while demand denotes the number of healthcare consumers. d. Supply refers to the government's allocation of healthcare resources, while demand represents the public's need for those resources. Answer: a. Supply refers to the quantity of healthcare services available, while demand represents the desire and ability of consumers to access those services. Rationale: Understanding the dynamics of supply and demand is essential in healthcare economics as it helps determine the equilibrium price and quantity of healthcare services. In this context, supply refers to the available healthcare services, and demand represents the consumers' desire and ability to utilize those services. 2. When discussing health insurance, what is the meaning of the term "premium"? a. The amount of money paid by the insured individual for involves comparing the costs incurred in implementing the project or intervention against the expected benefits or outcomes. The primary objective is to determine whether the financial benefits outweigh the costs, thus ensuring its feasibility. 5. In healthcare economics, what does the concept of elasticity refer to? a. The sensitivity of healthcare providers to consumer demand for services. b. The flexibility of healthcare regulations in response to market changes. c. The change in healthcare prices relative to the change in supply or demand. d. The ability of healthcare organizations to adapt to technological advancements. Answer: c. The change in healthcare prices relative to the change in supply or demand. Rationale: Elasticity in healthcare economics refers to the responsiveness or sensitivity of healthcare prices to changes in supply or demand. It helps measure the extent to which price changes occur as a result of alterations in these factors. By understanding elasticity, policymakers, healthcare organizations, and providers can predict and respond to shifts in the market. 6. Which of the following is a characteristic of a competitive market in healthcare? a. Limited number of sellers and buyers, leading to monopoly power. b. High barriers to entry, preventing new entrants from joining the market. c. Transparent and readily available information about prices and services. d. Government control over pricing and resource allocation. Answer: c. Transparent and readily available information about prices and services. Rationale: A competitive market in healthcare is characterized by having numerous sellers and buyers, facilitating price determination through interaction. In this context, transparent and readily available information about prices and services enables informed decision- making for both consumers and providers. It promotes competition, efficiency, and lowers information asymmetry. 7. What is the main purpose of anti-trust laws in healthcare economics? a. To regulate the quality and safety of healthcare services. b. To ensure fair competition and prevent monopolistic practices. c. To control the prices of healthcare services and medications. d. To promote ethical behavior among healthcare providers. Answer: b. To ensure fair competition and prevent monopolistic practices. Rationale: Anti-trust laws in healthcare economics aim to promote fair competition by preventing monopolistic practices that could harm consumers or limit the availability of healthcare services. These laws work toward maintaining a healthcare marketplace that encourages competition, innovation, and affordability while protecting consumers' interests. 8. What is the primary role of health technology assessment (HTA) in healthcare economics? a. To determine the impact of technological advancements on healthcare affordability. b. To evaluate the cost-effectiveness and value of medical technologies or interventions. c. To analyze the impact of government policies on the healthcare industry. d. To conduct economic analyses of healthcare organizations. Answer: b. To evaluate the cost-effectiveness and value of medical technologies or interventions. Rationale: Health technology assessment (HTA) plays a crucial role in healthcare economics by evaluating the cost- organizations expand in size. b. It allows healthcare organizations to negotiate lower prices for medical supplies and equipment. c. It results in increased healthcare costs due to the duplication of services in larger organizations. d. It has no significant effect on healthcare costs as economies of scale mainly apply to other industries. Answer: a. It leads to decreased healthcare costs as healthcare organizations expand in size. Rationale: Economies of scale in healthcare occur when the average cost per unit of healthcare service decreases as the scale of operations and organizational size increases. This reduction in average costs can be attributed to factors such as improved efficiencies, shared resources, and increased bargaining power. As a result, healthcare organizations that experience economies of scale can deliver services at a lower cost. 12. Which of the following best represents the concept of value-based healthcare? a. A reimbursement approach that rewards healthcare organizations based on patient satisfaction. b. A cost-saving strategy that focuses on reducing the overall spending on healthcare services. c. An interdisciplinary model that integrates medical, psychological, and social care. d. A healthcare delivery model that emphasizes achieving improved patient outcomes at a reasonable cost. Answer: d. A healthcare delivery model that emphasizes achieving improved patient outcomes at a reasonable cost. Rationale: Value-based healthcare is a delivery and reimbursement model that prioritizes the achievement of improved patient outcomes while controlling costs. It focuses on providing high-quality, cost-effective care by aligning payment incentives with value creation and promoting evidence-based practices. Value-based healthcare aims to optimize the value delivered to patients by integrating quality, cost, and patient experience considerations. 13. What is the impact of medical tourism on the economy of a destination country? a. It increases healthcare costs for local residents accessing medical services. b. It results in an inflow of foreign currency and boosts the local economy. c. It leads to a decline in the quality and accessibility of healthcare services. d. It encourages brain drain by attracting healthcare professionals to foreign countries. Answer: b. It results in an inflow of foreign currency and boosts the local economy. Rationale: Medical tourism, which involves individuals traveling to other countries to receive medical treatments at a lower cost or with better accessibility, can have a positive impact on the economy of the destination country. It brings in foreign currency through expenditures related to healthcare services, accommodations, transportation, and other associated activities. Medical tourism can stimulate economic growth and create employment opportunities, benefiting the local economy. 14. How does the aging population affect the healthcare system's financial sustainability? a. It increases demand for healthcare services and puts strain on healthcare resources. b. It reduces the need for healthcare services due to decreased life expectancy. c. It promotes healthier lifestyles and reduces healthcare costs. d. It has no significant impact on the financial sustainability of the healthcare system. Answer: a. It increases demand for healthcare services and puts strain on healthcare resources. Rationale: The aging population exerts pressure on the healthcare system's financial sustainability due to increased demand for healthcare services. Older individuals typically require more medical attention, long-term care, and resources related to age-related health conditions. This demographic shift places strain on healthcare resources, of a new health policy on the access and quality of care for low-income patients. She decides to use the difference-in- differences (DID) approach to estimate the causal effect of the policy. What are the main assumptions of this approach? a) The policy is randomly assigned to the treatment group and not to the control group b) The policy is applied uniformly to all units in the treatment group and none in the control group c) The outcome variable is measured before and after the policy implementation for both groups d) All of the above *Answer: d) All of the above* Rationale: The difference-in-differences approach is a quasi-experimental method that compares the change in the outcome variable between a treatment group and a control group before and after a policy intervention. The main assumptions of this method are: 1) The policy is exogenous, meaning that it is randomly or quasi-randomly assigned to the treatment group and not to the control group, or that there are no confounding factors that affect both the policy assignment and the outcome variable; 2) The policy is homogeneous, meaning that it is applied uniformly to all units in the treatment group and none in the control group, or that there are no spillover effects or compliance issues that affect the exposure to the policy; 3) The outcome variable is observable, meaning that it is measured before and after the policy implementation for both groups, or that there are no measurement errors or missing data that affect the validity of the results. 3. A nurse educator is designing a curriculum on health economics for nursing students. She wants to include a topic on market failures and how they affect the efficiency and equity of health care systems. What are some examples of market failures in health care? a) Asymmetric information b) Externalities c) Public goods d) All of the above *Answer: d) All of the above* Rationale: Market failures are situations where the market mechanism fails to allocate resources efficiently or equitably, resulting in social welfare losses. Some examples of market failures in health care are: 1) Asymmetric information, which occurs when one party has more or better information than another party, leading to adverse selection or moral hazard problems; 2) Externalities, which occur when one party's actions affect another party's welfare without being reflected in the market price, leading to under-provision or over-provision of goods or services; 3) Public goods, which are goods or services that are non-rivalrous and non-excludable, meaning that one person's consumption does not reduce another person's consumption and that no one can be prevented from consuming them, leading to free-riding or under-provision problems. B: Question 1: Which of the following best describes the concept of moral hazard in the context of health care economics? a) A situation where individuals overconsume health care services due to reduced personal financial risk b) A condition where health care providers prioritize profit over patient well-being c) The tendency for insurance companies to deny coverage for pre-existing conditions d) The phenomenon where government intervention leads to increased inefficiency in the health care system Answer: a) A situation where individuals overconsume health care services due to reduced personal financial risk Rationale: Moral hazard refers to the increased likelihood of individuals to use health care services excessively when the financial burden is shifted away from them, leading to overconsumption. Question 2: What is the primary goal of cost-effectiveness analysis in health care economics? a) Maximizing the profits of pharmaceutical companies b) Evaluating the cost of medical procedures without considering their effectiveness c) Comparing the relative costs and health outcomes of different interventions care to uninsured individuals are shifted to those with insurance, leading to higher premiums and out-of-pocket expenses for the insured population. Question 6: How does the concept of "provider-induced demand" impact health care economics? a) It leads to an oversupply of health care providers in urban areas b) It results in patients demanding unnecessary medical treatments c) It influences the pricing strategies of pharmaceutical companies d) It involves health care providers influencing patients to seek more medical care than necessary Answer: d) It involves health care providers influencing patients to seek more medical care than necessary Rationale: Provider-induced demand refers to the phenomenon where health care providers influence patients to seek more medical care than necessary, often leading to unnecessary treatments and increased health care spending. Question 7: What role does the government play in regulating health care markets to ensure efficiency and equity? a) Setting price controls on prescription medications b) Mandating the purchase of private health insurance c) Subsidizing medical education for health care providers d) Regulating the quality and safety of health care services and products Answer: d) Regulating the quality and safety of health care services and products Rationale: The government regulates health care markets to ensure efficiency and equity by overseeing the quality and safety of health care services and products, thus protecting consumers from substandard care. Question 8: Which of the following factors contributes to the rising cost of health care in the United States? a) Decreased utilization of advanced medical technologies b) Limited administrative expenses within the health care industry c) The high prevalence of chronic diseases and comorbidities d) Reduced demand for specialty medical services Answer: c) The high prevalence of chronic diseases and comorbidities Rationale: The high prevalence of chronic diseases and comorbidities contributes to the rising cost of health care in the United States due to the increased need for ongoing medical management and treatment. Question 9: How does the concept of "bundled payments" aim to improve the efficiency of health care delivery? a) By encouraging patients to pay for medical services in advance b) By simplifying the billing process for health care providers c) By linking payments for multiple services provided during a single episode of care d) By standardizing the prices of prescription medications across different providers Answer: c) By linking payments for multiple services provided during a single episode of care Rationale: Bundled payments aim to improve the efficiency of health care delivery by linking payments for multiple services provided during a single episode of care, incentivizing coordination and quality of care. Question 10: What is the primary purpose of health insurance exchanges in the United States? a) To regulate the prices of prescription medications b) To facilitate the purchase of private health insurance plans c) To provide free health care coverage for low-income individuals d) To oversee the distribution of government-funded health care programs Answer: b) To facilitate the purchase of private health insurance plans Rationale: Health insurance exchanges in the United States serve the primary purpose of facilitating the purchase of Question 14: How does the concept of "economies of scale" apply to the provision of health care services? a) It encourages the decentralization of health care facilities b) It leads to increased costs as health care facilities expand in size c) It allows for cost savings through the efficient production of health care services at a larger scale d) It results in lower quality of care as health care facilities grow in size Answer: c) It allows for cost savings through the efficient production of health care services at a larger scale Rationale: Economies of scale in health care services enable cost savings through the efficient production of services at a larger scale, leading to improved efficiency and resource utilization. Question 15: What role does health care financing play in addressing health disparities within a population? a) It exacerbates disparities by favoring individuals with higher incomes b) It ensures that all individuals have equal access to health care services c) It provides financial incentives for health care providers to discriminate based on patients' demographics d) It can contribute to addressing disparities by allocating resources to underserved communities Answer: d) It can contribute to addressing disparities by allocating resources to underserved communities Rationale: Health care financing can contribute to addressing health disparities by allocating resources to underserved communities, thereby improving access to care and reducing inequities in health outcomes. C: 1. Which of the following accurately describes the concept of efficiency in health care systems? a) It refers to the ability of a health care system to provide high-quality care to all individuals. b) It emphasizes the focus on cost-effectiveness and minimizing waste in delivering health care services. c) It refers to the measurement of patient satisfaction with their health care experiences. d) It emphasizes the importance of reducing wait times for medical procedures. Answer: b) It emphasizes the focus on cost-effectiveness and minimizing waste in delivering health care services. Rationale: Efficiency in health care systems refers to the optimal use of resources to achieve the best possible health outcomes at the lowest cost. It involves minimizing waste, reducing unnecessary treatments, and prioritizing cost- effective interventions. 2. Which of the following is an example of a primary prevention strategy in health care? a) Distribution of clean needles to injection drug users. b) Screening and early detection programs for breast cancer. c) Prescription of cholesterol-lowering medications for patients with high cholesterol. d) Implementation of workplace safety programs to prevent injuries. Answer: d) Implementation of workplace safety programs to prevent injuries. Rationale: Primary prevention aims to prevent the occurrence of diseases or injuries before they happen. Workplace safety programs are an example of primary prevention as they focus on reducing the risk of injuries and accidents before they take place. 3. When studying the elasticity of demand for health care services, which factor is most likely to make demand less elastic? a) Availability of substitutes for the health care service. b) The proportion of income spent on the service. c) The degree of necessity or urgency of the service. d) The level of income of individuals seeking the service. Rationale: A market-based system allocates health care resources based on individuals' willingness to pay. In such systems, individuals who can afford to pay for health care services receive treatment according to their ability to pay. 7. Which of the following accurately defines the concept of "health disparities"? a) Differences in access to health care among economically disadvantaged individuals. b) Inequalities in health outcomes between different population groups. c) Variations in the quality of healthcare services provided by different hospitals. d) The difference in health care expenditures between developed and developing countries. Answer: b) Inequalities in health outcomes between different population groups. Rationale: Health disparities refer to systemic differences in health outcomes between different population groups due to social, economic, or environmental factors. These disparities can include variations in disease prevalence, mortality rates, access to care, and health promotion. 8. Which of the following best describes the purpose of health technology assessment (HTA)? a) Analyzing the fiscal impact of various health care policies on the economy. b) Assessing the safety and efficacy of new medical interventions or technologies. c) Evaluating the cost-effectiveness of health care interventions and programs. d) Identifying the most efficient ways of organizing health care delivery systems. Answer: c) Evaluating the cost-effectiveness of health care interventions and programs. Rationale: Health technology assessment (HTA) is a multidisciplinary field that evaluates the safety, efficacy, and cost-effectiveness of health care interventions (e.g., drugs, devices, procedures) or health care programs. Its primary goal is to inform decision-making and resource allocation in the health care system. 9. Which of the following is a characteristic of a fee-for- service payment system? a) Providers receive a fixed payment regardless of the services provided. b) Payments are tied to the achievement of specific health outcomes. c) Reimbursement amounts are based on a predetermined fee schedule. d) A single payer is responsible for financing all health care services. Answer: c) Reimbursement amounts are based on a predetermined fee schedule. Rationale: In a fee-for-service payment system, providers are reimbursed for each service they deliver to a patient. The reimbursement amount is typically based on a predetermined fee schedule that assigns a specific price to each service performed. 10. Which of the following is a key principle of managed care organizations (MCOs)? a) Direct payment for all health care services rendered. b) Promotion of unrestricted access to any health care provider. c) Emphasis on preventive care and disease management. d) Absence of financial incentives for reducing unnecessary services. Answer: c) Emphasis on preventive care and disease management. Rationale: Managed care organizations (MCOs) focus on coordinating and managing health care services for a defined population. One key principle of MCOs is to promote preventive care and disease management to improve health outcomes and control costs. 11. What is the primary goal of health insurance coverage