Topic 1 Practice Questions - Health Economics PDF

Topic 1: Introduction to Health Economics and the Canadian Health Care System Practice Questions Multiple Choice – Please choose the BEST answer (answers provided at the end of this document) 1. Health expenditures as a percentage of GDP have been on the rise in Canada since the 1960s. W...

Topic 1: Introduction to Health Economics and the Canadian Health Care System Practice Questions Multiple Choice – Please choose the BEST answer (answers provided at the end of this document) 1. Health expenditures as a percentage of GDP have been on the rise in Canada since the 1960s. Which of the following statements is not a valid reason explaining the increases in past years? a) The relative price of health care may have risen b) The population size may be increasing c) People may be purchasing higher quality health care over time d) People may be buying more health services 2. Which of the following ideas/topics cannot be used to explain the following statement: “Many people pass up free health care because the wait times and travel costs are too high”? a) Opportunity cost b) Rational decision making c) Health care financing d) Marginal analysis 3. Which of the following is not a valid example of how health care is different from most other economic goods? a) Prices do not influence demand b) Large presence of non-profit firms c) Presence and extent of uncertainty d) Role of equity and need 4. Which of the following is not a criterion of the Canada Health Act: a) Portability b) Accessibility c) Comprehensiveness d) Cost-effectiveness 1 TRUE and FALSE (Answers provided at the end of this document) 5. The criterion of “portability” under the Canada Health Act refers to the fact that the provincial health insurance plan must cover non-residents who are visiting the province. T F Why? False. The criterion of “portability” refers to the fact that the provincial health insurance plan must cover provincial residents, even when they are out-of-province. There is no principle that non-residents should be covered by a provincial health insurance plan. 6. In the view of economists “health” and “health care” are two different things. T F Why? True. “Health” is thought of in terms of health status which can range from good to poor. “Health” enters into people’s utility functions giving them happiness and letting them live longer, more productive lives. “Health care” is simply a good/service that people demand due to its effect on “health”. While “health care” may have a negative direct impact (few people like needles) it often has a positive indirect impact through its effect on “health”. 7. The decision of a patient to take 8 pills for treatment because the average benefit per pill is greater than the average cost per pill is an example of a consumer using marginal decision making. T F Why? False. This consumer of pills is apparently not using marginal decision making at all, he or she is making decisions based on average benefit and average cost. Marginal decision making in this context would require that each pill in succession is taken only if the marginal/additional benefit of taking the next pill is greater than the marginal/additional cost of taking the next pill. The consumer should stop taking pills when this condition no longer holds (that is, keep taking pills until the marginal benefit of another pill is less than or equal to the marginal cost). 2  8. The topic of health care funding deals with the various ways that revenues can be raised to pay for health care provision. T F Why? False. This topic is called health care “financing”, not “funding”. Two common examples of health care financing methods are the taxes used by public health care systems and the insurance premiums used by private health care systems. “Health care funding” entails providing health care organizations with the financial resources required to carry out their activities. 9. In topic 1 we discussed how some countries (such as Japan) have devoted their health care system to providing significantly more acute short term hospital beds than most other OECD countries. This is likely due to the way that these countries (such as Japan) finance their health care differently from other OECD countries. T F Why? False. This does not necessarily have to do with how these countries have financed their health care system since it doesn’t really have to do with how the health care resources are raised (such as using taxes or private insurance etc.). However it is due to how these countries fund and deliver their health care. Once the resources are raised through financing it is how these resources are used for funding organizations and physicians and how these resources are used to deliver health care that likely has to do with why these countries have decided to have significantly more acute short term hospital beds than other countries (usually by making a trade off of deciding to fund more short term beds over spending the funding in another way). Multiple Choice Answers: 1(b), 2(c), 3(a), 4(d) 3