Terms to define, identify, explain or differentiate:

  1. Managed care
  2. Cost shifting
  3. Self-insurance
  4. Capitation
  5. Third-party payers
  6. Diagnosis-related group
  7. Defensive medicine
  8. Moral hazard
  9. Public goods vs. Private goods
  10. Rational ignorance
  11. Scientific method in economics
  12. Marginal analysis
  13. Price elasticity of demand, cross-price elasticity of demand, income elasticity of demand
  14. Consumer and producer surplus
  15. Market failure
  16. Government failure
  17. Universal coverage vs. universal access
  18. Natural monopoly
  19. Optimal output level and economic efficiency
  20. Externality
  21. Examples of externalities related to health care markets
  22. Non-excludable goods
  23. Non-rival goods
  24. Free rider problem
  25. Merit good
  26. Asymmetric information
  27. Barriers to entry
  28. Certificate of need
  29. Retrospective pricing vs. prospective pricing
  30. Usual, customary and reasonable charge
  31. Medical savings accounts
  32. Derived demand for medical care
  33. Mortality
  34. Morbidity
  35. QALY
  36. Income elasticities and luxuries vs. necessities vs. inferior goods
  37. Deductibles
  38. Co-pay or Coinsurance
  39. Principal-agent relationship / Agency Problem
  40. Supplier-induced or physician-induced demand 

 

 

 

 

 

Basic Question Themes:

  1. What are the conditions or combinations of conditions that have led to high rates of price increases in health care?
  2. Why would price caps on health care prices be inefficient? 
  3. Under current U.S. law, there is a prohibition against selling and buying used body parts (transplantable organs).  This has led to shortages and long waiting lines for organ transplants.  Explain how doctors gain, while patients may not gain from relying on the generosity of the deceased and their families.  What are the dangers of a market for organs?  What are the dangers of not having a market for organs?
  4. How does health insurance and third-party payment structures in health care affect the demand for health care?
  5. How do individual discount rates, or rates of time preference, affect an individual’s health and demand for medical care?  What does this have to do with human capital theory?
  6. Asymmetric information leads to two problems in health care demand: a) moral hazard and b) physician-induced demand.  Explain.
  7. If you were going to try to estimate a demand function, what factors would you try to take into account?  What variable would you want to measure for Quantity Demanded? What variables would you look for that you think would affect Quantity Demanded (causal variables)?
  8. Why is the market structure (competitive market type) of health care markets important to look at?
  9. What are the arguments for government intervention in health markets (market failures)? How might government fail in these markets as well?  If public health were defined along the lines of the public goods/private goods distinction made by economists, what types of health care would legitimately be classified as public health concerns?  What types of health care would be classified as private health concerns, properly dealt with using markets? 
  10. What is the problem with the argument that medical care or any other good or service is a merit good?