Healthcare Economics Exam: Concepts, Equations, and Knowledge Tests

Identifying healthcare economics concepts and answers used in decision making in organizations

Identify concepts and answers to health care economic equations used in organizations to make decisions about health care economics..The objective questions (general knowledge) test your factual knowledge; some require that you apply that knowledge to the solution of problems.The objective questions (short computations) test your factual knowledge; some require that you apply that knowledge to the solution of problems.

There are three tests (45 questions) that have a total of 15 questions in each. Each question is worth 2.2%. You will be expected to know what is relevant and what is not. You will also be expected to consider factors in addition to the amount of economic analysis that should affect a manager's decision in the situation. The total is 100% of the score.
 
To assess out of 3 academic credits for this exam, you must demonstrate competency and understanding at a graduate level of learning equivalent to a B (at least 80% of the responses are correct) for passing.Identify a product that is one organization’s output and another organization’s input. Can you think of any initiatives that reflect the input view of healthcare? What’s wrong with spending 17.2 percent of GDP on healthcare? Americans spend more on smartphones than the citizens of other countries, yet this type of spending is seldom described as a problem. Why is spending more on healthcare different? 

US national health expenditure was $7,026 per person in 2006 and $4,790 in 2000. The Consumer Price Index had a value of 201.6 in 2006 and a value of 172.2 in 2000. Adjusted for inflation, how much was spending in 2000? US national health expenditure was $148 per person in 1960 and $4,790 in 2000. The Consumer Price Index had a value of 29.6 in 1960 and a value of 172.2 in 2000. In 1960 dollars, how much was spending in 2000? How did the state and local government share of national health expenditures change between 2000 and last year? What accounts for this change? Go to the “Actuarial Studies” page on the website of the Centers for Medicare & Medicaid Services.

Your accountants tell you that it costs $400 to set up an immunization program at a preschool and immunize one child against polio. It will cost $460 to immunize 20 more children. What is the cost per child for the first child? What is the cost per child for these additional 20 children? What is the average cost per child? What concepts do these calculations illustrate? A new treatment of cystic fibrosis costs $2 million. The life expectancy of 1,000 patients who were randomly assigned to the new treatment increased by 3.2 years. What is the cost per life year of the new treatment? 

Objective questions that test factual knowledge and problem-solving abilities

Setting up nurse practitioner clinics to serve 20,000 newborns in Georgia would cost $6 million. This program would increase life expectancy at birth from 75.1 years to 75.3 years. How many life years would be gained? What is the cost per life year? Should this program be started? Why has the share of healthcare output produced by hospitals fallen? Will this trend continue? Can you think of a policy or technology change that would further reduce hospital use? Can you think of a policy or technology change that would increase hospital use? What implications do these changes have for the careers of healthcare managers?

Why is health insurance necessary? Explain how adverse selection and moral hazard are different, and give an example of each. “The United States is the land of the overinsured, the underinsured, and the uninsured.” What do you think that these concepts mean? Why might this comment be true?
 
Private health insurers have been slow to develop and adopt proven cost containment innovations (e.g., case rates or disease management programs). Why do you think that is the case? A radiology firm charges $2,000 per exam. Uninsured patients are expected to pay list price. How much do they pay? A radiology firm charges $2,000 per exam. An insurer’s allowed fee is 80 percent of charges. Its beneficiaries pay 25 percent of the allowed fee. How much does the insurer pay? How much does the beneficiary pay?

If the radiology firm raised its charge to $3,000, how much would the insurer pay? How much would the beneficiary pay?A surgeon charges $2,400 for hernia surgery. He contracts with an insurer that allows a fee of $800. Patients pay 20 percent of the allowed fee. How much does the insurer pay? How much does the patient pay? You have incurred a medical bill of $10,000. Your plan has a deductible of $1,000 and coinsurance of 20 percent. How much of this bill will you have to pay directly?

Why do employers provide health insurance coverage to their employees? Your practice offers only a PPO with a large deductible, high coinsurance, and a limited network. You pay $400 per month for single coverage. Some of your employees have been urging you to offer a more generous plan. Who would you expect to choose the more generous plan and pay any extra premium?What are the fundamental differences between HMO and PPO plans?

Suppose that your employer offered you $4,000 in cash instead of health insurance coverage. Health insurance is excluded from state and federal income taxes. (To keep the problem simple we will ignore Social Security and Medicare wage taxes.) The cash would be subject to state income taxes (8 percent) and federal income taxes (28 percent).How much would your after-tax income go up if you took the cash rather than the insurance?Why is it important to distinguish between fixed and variable costs?