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1) Some argue that birth centers have better outcomes than regular hospitals.

Why might this be true even if birth centers werent better at delivering babies? People with at-risk pregnancies will be more likely to go to a hospital. 2) What did the NYT (and your instructor) mention as a possible cause for French doctors earning less than American doctors?

The income distribution is less equal in American; intelligent people with advanced education make more money. 3) Lets say that there are two groups of people: poor and rich. The income of the rich increases so that they become super, duper rich. According to the spatial competition model , what impact might this have on poor people? Poor people might have a harder time getting a doctor as more doctors serve rich people. 4) In McGuires net benefit model, name something that puts a natural cap on the ability of the physician to extract surplus from the patient.

Patients have the option of not getting service or they can switch to another doctor. 5) Insurance reduces a consumers incentive to shop for the lowest price doctor. However, name a way that insurance might increase consumer search? It is cheaper to try out a new doctor. 6) Pfizer wants Lipitor sold without a prescription. What would Pfizer use as an argument in favor of this proposal? There is a huge group of people who should be taking a statin, who currently arent being treated. 7) Your friend believes that board members of not-for-profit hospitals run the hospital with the purpose of maximizing the salary of board members. Why is this opinion uninformed? Board members typically do not draw salaries. 8) On average, big hospitals charge more per patient than small hospitals. Why doesnt this mean that small hospitals are more efficient than big hospitals? Big hospitals probably attract more severe problems, and they are more likely to have more advanced equipment. 9) Smoking hurts state and federal budgets through increased Medicaid payments. Even though this is true, why wouldnt reduced smoking help the long run debt problem?

Smokers collect less in Medicare benefits and Social Security benefits.

10) Medicare Part B is optional. Why does almost everyone eligible buy it? It is heavily subsidized.

11) When Medicare Part C was first introduced, it increased the amount the government spent on Medicare. Why? It attracted a healthier than average population yet paid insurers a rate appropriate for average patients.

12) Many people think Medicares prospective payment system for hospitals was a success. Name one reason why implementing prospective payment for doctors might be more difficult. It is difficult to isolate a single episode of care. Also, there is frequently more than one doctor involved.

13) What is a disproportionate share payment? It is extra reimbursement for a hospital that treats a lot of Medicaid patients.

14) Mutilating corpses violates Islamic law. This has led Iran to adopt what usual healthcare policy? Legalize the selling of kidneys.

15) Obstetricians have much higher malpractice premiums than geriatricians, yet they are (presumably) similar in caring and ability. Why does this make sense from the standpoint of the Learned Hand Rule? Babies have a lot of life years left, so negligence involving pregnancy can be disproportionately harmful.

16) What is the major benefit of a no-fault insurance system? It reduces administration costs, because the system doesnt need to determine which party was at fault. 17) Interest rates decrease dramatically. What is likely to happen to malpractice insurance premiums? Why? The will decrease, because investment earnings will increase from the time period that the premium is paid until the date a claim is paid. 18) Medicaid provides Long Term Care for those without assets. What do look-back rules try to prevent? Parents giving their assets to their children right before they need a nursing home.

19) Who has a harder time finding doctors: Medicare or Medicaid patients? Why? Medicaid patients because fewer doctors except the lower Medicaid patients.

20) A state wishes to increase the income threshold to qualify for SCHIP. Will this decrease crowdout? Why? Decrease the rate of crowd-out, because people with higher incomes are more likely to buy insurance themselves. 21) Some economists argued that a commercialized blood system would lead to greater safety. What was their argument? In a commercialized system, there might be a greater financial liability for contamination. 22) Why was the Vaccine Injury Compensation Program created? By reducing liability risk, the government wanted to guarantee that companies created an adequate supply of vaccines.

23) The textbook mentions that medical procedures that are heavily advertised are typically

not covered by insurance. Name one reason why.


If a procedure is covered by insurance, consumers will be steered to a provider in the insurers network; therefore advertising might have less input in the choice of provider.

24) Inducement is one reason why towns with more doctors might have more medical procedures. Another reason is that doctors might locate in towns with more sick people. Name a third reason. People with fewer doctors in their town are likely to receive treatment in towns with many doctors.

25) What does the substitution effect imply about the amount of inducement that will occur when doctor fees are cut? The substitution effects implies that doctors are discouraged from inducing care because they are getting compensated less inducement.

26) Why might a not-for-profit hospital have more control over a hospitalist than the typical doctor? Hospitalists are typically employees of the hospital.

27) Someone argues that Medicaid patients have worse health outcomes than the uninsured and therefore poor people would be better off without Medicaid. Why might this be an unconvincing argument.

Healthy people may be less likely to buy insurance since they will not use the benefits as much.

28) In the context of hospital experience, what is the "referral effect"? Good hospitals will attract more customers than bad hospitals because of reputation. 29) How might use of "contingency fees" reduce frivolous lawsuits? If juries do not give awards for frivolous lawsuits, then lawyers will have no reason to bring these lawsuits in front of a jury.

30) Why hasn't the "sustainable growth rate" had the desired impact on reducing health care costs? It keeps getting waived.