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Health Services > Exam 1 > Flashcards

Exam 1 Flashcards

1
Q

Define Health Economics

A

Choices people make because of availability of resources to satisfy their unlimited wants

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2
Q

Study of how individuals, organizations, firms, governments and nations make choices regarding their health and healthcare in the allocation of scarce resources to satisfy their unlimited wants.

A

Health Economics

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3
Q

4 examples of unlimited wants

A

Overall survival, recurrence-free survival, continue work at best capability, quality of life.

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4
Q

Define unlimited wants

A

Goals, desires, needs

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5
Q

Time, money, health, opportunities are examples of what

A

Scarce resources

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6
Q

True or false: Scarce resources are all finite

A

True

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7
Q

Define choices

A

All possible allocations of actions and resources used to reach goals/satisfy wants

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8
Q

All the possible allocations of actions and resources used to reach goals and satisfy wants

A

Choices

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9
Q

Why are decisions difficult

A

There is usually no win-win

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10
Q

Define cost

A

Negative outcomes of a choice

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11
Q

Define benefit

A

Positive outcomes of a choice

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12
Q

True/false: Making a choice is a benefit of that choice

A

False, it is a cost

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13
Q

Define Tradeoff

A

All choices have positive and negative outcomes

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14
Q

One choice precludes other choices

A

Tradeoff

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15
Q

True/false: there are tradeoffs in BOTH the choice and in making the choice

A

True

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16
Q

What does economics want to do with choices?

A

Understand them, quantify the value of a choice, identify the optimal choice within a decision

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17
Q

Define opportunity cost

A

The NEXT best choice for any given choice

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18
Q

True/False: There can be two opportunity costs for a choice

A

False, always just one

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19
Q

True/False: Not picking the best choice means you are irrational

A

False, the best choice was not available

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20
Q

Costs can be categorized into two taxonomy

A

Tangible and intangible

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21
Q

Tangible costs can be put into two categories

A

Direct and indirect

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22
Q

Direct tangible costs are broken into two categories

A

Medical and non medical

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23
Q

Lost productivity is defined as what type of cost

A

Indirect tangible cost

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24
Q

Define Tangible

A

Costs which are typically measured in monetary units

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25
Q

Define Intangible Costs

A

Costs which can be given a monetary value but not usually measured this way

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26
Q

T/F: Fear of cancer recurrence is a tangible cost

A

False, Intangible

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27
Q

Define Direct Costs

A

Costs associated with medical treatment and recovery process

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28
Q

Define indirect costs

A

Costs that include lost potential productivity resulting from illness-related absences or impaired performance at the workplace

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29
Q

What is health economics primarily concerned about?

A

The study of decisions regarding health and healthcare, under the reality of constraints

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30
Q

Define domains

A

Aspects of a decision are characterized into these

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31
Q

What do domains include

A

Components

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32
Q

T/F: A decision includes at least 2 choices

A

True

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33
Q

All of the different components associated with a given choice

A

Consumption bundle

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34
Q

Consumption bundle

A

All of the components of one choice

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35
Q

Why would two people choose different consumption bundles?

A

They value the overall consumption bundles differently

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36
Q

Why would two people feel differently about the same consumption choice?

A

They value individual components differently

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37
Q

T/F: You cannot argue preferences

A

False, everyone has different preferences

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38
Q

Define Utility

A

Value placed on each consumption bundle/choice

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39
Q

What is the mathematical equation for a bundle

A

U(x1, x2, x3)

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40
Q

T/F: Utility bundles can be quantified

A

True

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41
Q

Once the utility of each consumption bundle is evaluated what can be identified?

A

The optimal choice within a decision

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42
Q

T/F: Optimal choices are those with the lowest utility

A

False: Highest Utility

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43
Q

Name the 2 assumptions of making choices

A
  1. Individuals are rational

2. Utility is a good thing

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44
Q

Define rational

A

Prefer more utility as opposed to less

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45
Q

T/F: The actual utility value matters in the decision

A

False, the relative value matters

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46
Q

Can you make a wrong choice?

A

Yes, if you misidentify or learn something new about a choice

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47
Q

T/F: The number of components in consumption bundles do not have to be the same

A

True

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48
Q

T/F: The components in all bundles must match

A

False, they do not have to be the same as the next bundle

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49
Q

T/F: Domains must be the same across choices

A

False, they do not have to be the same

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50
Q

Why are factor loadings useful?

A

They give relative importance to components within a choice and across choices

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51
Q

What represents the relative importance of components?

A

Factor loadings

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52
Q

Decrease of utility results in what?

A

A cost

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53
Q

How are costs shown in a mathematical model?

A

Negative factor loading

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54
Q

Who is Grossman?

A

Father of health economics

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55
Q

4 points of the Grossman model

A
  1. We value health
  2. Left alone, health deteriorates over time
  3. Cannot/do not buy health
  4. We buy or already have goods that are used to produce health
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56
Q

What are goods that we already have to produce health?

A

Age, gender, race

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57
Q

Define endowments

A

Things you cannot change

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58
Q

Define the variable Zt

A

Commodities at time t

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59
Q

T/F: Grossman’s model says individuals value health and commodities

A

True

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60
Q

Define commodities

A

Everything else you want in life

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61
Q

Define variable It

A

Amount of health invested during time t

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62
Q

How do we offset depreciation of health?

A

Investing/producing in health

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63
Q

Examples of health production inputs

A

Comorbidity, medication, food, exercise

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64
Q

What is the output of health production?

A

Health, years of life, number of healthy days

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65
Q

Health production function

A

Output=f(inputs; endowments)

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66
Q

Marginal product of health care

A

The change in number of healthy days, caused by a change in the amount of health care used, holding all other inputs constant

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67
Q

Equation for marginal product of health care function

A

MP=ChangeDh/ChangeHC

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68
Q

Marginal product of health

A

Measure of how many healthy days are produced with an input of health care

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69
Q

Larger number of marginal product health means

A

Individual is better at making healthy days than another, can produce more healthy days with the same input

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70
Q

Law of diminishing marginal returns

A

As you put more and more in, you get less and less out

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71
Q

Variable It

A

Amount of health produced during time t

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72
Q

Variable Mt

A

goods, medical care purchased during time t

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73
Q

Variable E

A

Endowment

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74
Q

Variable Xt

A

Goods purchased to produce commodities during time t

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75
Q

2 constraints of Grossman model

A
  1. Budget constraint

2. Time constraint

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76
Q

Describe the budget constraint of the Grossman model

A

Total money is equal to the amount spent on medical goods and all other goods

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77
Q

Budget constraint equation

A

W(TW)=PmM+PxX

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78
Q

Variable W

A

Wage

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79
Q

Describe the time constraint of the Grossman model

A

Total time=time spent at work, producing health, producing commodities, and in leisure

80
Q

Time constraint equation

A

TT=TW+TH+TZ+TL

81
Q

What are the choices in the Grossman model?

A
  1. How much to buy

2. How much time to spend

82
Q

Would a more educated person be more likely to invest in their health than a less educated person?

A

Yes, produce more, more money

83
Q

Would a wealthier person be more likely to invest in their health than a less wealthy person?

A

Yes, wealthier=healthier

84
Q

T/F: In the budget constraint any amount of M chosen means more of X will be available

A

False, less of X is available

85
Q

T/F: In the time constraint any amount of TH that is chosen is taken from TT

A

True

86
Q

What kind of good is health care?

A

Normal good

87
Q

What is the problem with health care?

A

Scarcity, budget, resource, time, diminishing marginal returns

88
Q

Describe what diminishing marginal returns means

A

More resources produced leads to decreased output

89
Q

How do we solve the healthcare problem?

A

Choices, which happen due to scarcity, evaluating opportunity cost which leads to trade offs

90
Q

Describe healthcare before 1875

A

Not very effective, pure market system, charity hospitals

91
Q

Define pure market system

A

If you wanted a service you paid right away in cash or bartering items

92
Q

Why did uncertain health outcomes begin to rise in the early 1800’s?

A
  1. Disagreements about the best technology
  2. Substantial variation in provider ability
  3. Many competing practitioner types
93
Q

T/F: The civil war created a set back in health care

A

False; it moved health care forward greatly

94
Q

T/F: The majority of people who died during the civil war, died due to disease

A

True, 398,000 people

95
Q

What helped to advance health care during the civil war?

A

Remedies that worked and did not work became clear, methods of all providers began to converge on effective therapies

96
Q

When did licensing for medical professionals start to become a requirement?

A

1875-1900

97
Q

When did the diploma mill begin and explain the significance

A

1875-1900, medical schools began appearing quickly, quality varied greatly

98
Q

When was the Council on Medical Education created?

A

1904

99
Q

Why was the CME created?

A
  1. Develop minimum standards for medical schools

2. Grade medical schools

100
Q

Describe Bulletin #4

A

Created a grading system based on AMA standards and teaching resources

101
Q

Who created Bulletin #4?

A

Abraham Flexner of the Carnegie Foundation for the Advancement of Teaching

102
Q

T/F: Bulletin #4 was created in 1912

A

False; 1910

103
Q

When did the number of medical schools begin to fall?

A

1912

104
Q

When was the Federation of State Medical Boards formed?

A

1912

105
Q

What happened between 1900-1915 with medical care?

A
  1. Access begins to fall, access to medical training also falls
  2. Began to exclude professions that were not allothpathic
  3. Quality of care improved
  4. Prices rose
106
Q

What kinds of jobs offered disability and health benefits to workers between 1900 and 1915?

A

Dangerous occupations, unions, fraternal organizations

107
Q

Name 3 reasons as to why insurance markets arose

A
  1. Severe illness is random and rare
  2. Future healthcare needs are uncertain
  3. Healthcare services are expensive
108
Q

In what year did workman’s compensation insurance arise?

A

1914

109
Q

What happened with insurance in the 1920s?

A

The labor movement called for universal health insurance

110
Q

When was the Blue Cross formed and who did it serve?

A

1929, teachers

111
Q

What did the Blue Cross give when first starting?

A

21 days of hospital care for teachers in Dallas

112
Q

Why is health care tied to employment?

A

Offering health insurance to groups of workers is less risky, are not sick as much

113
Q

When did insurance become a cheaper benefit from firms?

A

In 1950s due to tax changes

114
Q

What percent of working adults has private health insurance?

A

56%

115
Q

What percent of working adults had private health insurance around 1960?

A

67%

116
Q

What did the Civil war lead to?

A

Medical advances

117
Q

What did WWII cause in the health care field?

A

Employer sponsored health insurance

118
Q

Name the four themes of hospital pharmacy

A
  1. Drug Product
  2. Patient Safety
  3. Rational Drug Therapy
  4. Optimal Outcomes
119
Q

Name 3 phases of community pharmacy practices in order of when they began

A
  1. Compounding
  2. Distributing (Rose greatly around 1940)
  3. Patient Care
120
Q

When was pharmacy declared as a clinical profession?

A

1985

121
Q

When were pharmacists required to begin counseling patients and recording prescription records?

A

1990

122
Q

When was Medicare part D created?

A

2003

123
Q

Define Imperfect Information

A

Pricing of healthcare is not straight forward, sometimes available after the treatment, hard to define what you will owe

124
Q

T/F: Healthcare is a big budget item

A

True

125
Q

How many hospitals could provide a complete bundle price for a common surgical procedure?

A

9 top ranked (45%) and 10 non top ranked (10%)

126
Q

How many prices could be obtained by contacting the hospital and physician separately?

A

3 top ranked (15%) and 54 non top ranked (53%)

127
Q

How many hospitals could provide prices for an electrocardiogram?

A

3/20

128
Q

How many hospitals could provide prices for parking?

A

19/20

129
Q

Describe imperfect information regarding patients and providers

A

Patients do not know if they are getting good services, patients and providers are uncertain of outcomes, difficult to get expert advise due to no consumer reports

130
Q

Why is it difficult to get expert medical advice?

A

No consumer reports

131
Q

Define induced demand

A

Physician recommends care that the patient might not want or need if they had been fully informed

132
Q

Why does induced demand happen less in commercial merchandising?

A

Competition and reviews prevent it

133
Q

Describe the correlation between physicians and fees

A

More physicians = increased pricing

134
Q

Why is there a direct correlation between physicians and pricing?

A

Not a competitive market

135
Q

When physicians are paid per service provided…..

A

They provide more service

136
Q

Why did McAllen have higher costs?

A

Ambiguity of diagnosis would result in extra tests

137
Q

Describe self referral

A

Referral by doctors to facilities in which they have a financial interest

138
Q

Where does practice area variation come from?

A

Assumed that variation is caused by inappropriate care, but treatments are not uniform and some areas have higher rates of obesity/poverty/retirement

139
Q

If physicians are exploiting asymmetric information…

A

They are recommending different treatments for patients than they would choose for themselves

140
Q

What types of people qualify for medicare?

A

Dialysis, disabled, over 65 years old

141
Q

Why do people buy insurance?

A

Avoid loss under uncertainty, most are risk adverse and willing to pay to avoid future loss

142
Q

Examples of insurance

A

Property loss (Car, rent, flood), health loss (Life, health, disability)

143
Q

T/F: All risks can be covered by insurance

A

False, things you can control

144
Q

What do people not insure themselves against?

A

Small negative effects, unlikely events

145
Q

Does health insurance compensate for loss of health?

A

No, life and disability do

146
Q

What kind of loss occurs most frequently?

A

Health loss

147
Q

T/F: Health loss may create an ongoing need for medical care rather than a one time payment

A

True

148
Q

Define pool risk

A

Create certainty out of uncertainty by bringing groups of people with different risks together, having mostly low cost enables you to provide care for higher cost

149
Q

Define expected costs

A

Amount of loss * probability of loss = expected loss

150
Q

What equation is used to determine charges for coverage?

A

Cost/# of people pooled

151
Q

Define a loading fee

A

Administrative expenses plus profit

152
Q

What does a premium equal?

A

Expected loss plus loading fee

153
Q

What are typical administration costs today?

A

30%

154
Q

Define premium

A

Amount of money that you and/or your employer pay each month for insurance coverage

155
Q

What is the average total contribution for a premium?

A

$1462.08

156
Q

What is the average employee contribution for a premium?

A

$416.25

157
Q

Define Moral Hazard

A

Changes in the amount or probability of loss as a result of insurance coverage

158
Q

Moral Hazard can also be called

A

Insurance induced demand

159
Q

What happens when insurance prices decrease?

A

Utilization is increased

160
Q

What happens when you remove risk?

A

People will not practice good risk management techniques

161
Q

Does health insurance coverage change the amount or probability of loss?

A

Yes, probability of illness and amount of healthcare used in event of illness

162
Q

T/F: Insurance increased incentive to price shop

A

False, Anything covered gives up the incentive to price shop

163
Q

Describe moral hazard

A

Increase utilization to make full use of cost, but this ends up increasing cost

164
Q

Define welfare loss

A

People are using goods and services that they value less than the market price of the good or service

165
Q

T/F: High risk individuals are more likely to purchase insurance than low risk

A

True

166
Q

How is insurance impacted by asymmetrical information?

A

Most patients do not tell insurance about risks/illnesses

167
Q

T/F: If someone has a condition and does not have insurance, they will most likely not wait until they get insurance to get treatment

A

False, most wait until they get insurance

168
Q

Negatives of adverse selection

A
  1. High prices cause more low risk people to not purchase insurance
  2. If more high-risk people buy insurance than low risk, expected losses will be higher and premiums increase
169
Q

Define risk removal

A

Risk of unpredictable catastrophic medical care costs, so there is valid reason for purchasing insurance to avoid risk

170
Q

Define prepayment

A

Most health insurance policies also cover many predictable and/or non-catastrophic medical expenses (routine)

171
Q

Why would you pre pay?

A
  1. Insurance is often through employer so you don’t see real cost
  2. Tax subsidy for health insurance benefits through an employer
  3. Insurers may use bargaining power to lower prices charged by health care providers
172
Q

Why is health insurance so expensive?

A

Moral hazard, adverse selection, pre payment

173
Q

When was the first official apothecary created?

A

1752

174
Q

When was the first pharmacopeia founded?

A

1820

175
Q

When was the first official pharmacy school opened?

A

1821

176
Q

When did APhA begin?

A

1852

177
Q

What happened in pharmacy from 1890-1900s

A

Proliferation of proprietary, homeopathy used, alcohol and opium used as remedies

178
Q

When APhA started, what professionals were included?

A

All pharmacists regardless of setting

179
Q

When was the Flexner report created?

A

1910

180
Q

Describe the Flexner report

A

Initiative by government to investigate the direction of medicine

181
Q

When were MD’s made official?

A

1942

182
Q

When was it required to get a B.S. in pharmacy?

A

1932

183
Q

What happened in pharmacy from 1950-1960?

A

Increased distribution in community practice, decrease of compounding

184
Q

When did Eugene White’s Counter Revolution happen?

A

1950-1960

185
Q

What happened in 1985?

A

Hilton Head Conference, declared clinical pharmacy a thing

186
Q

What happened in pharmacy in the 1920s?

A

Grew greatly, commercial stores could sell alcohol

187
Q

When did counseling patients become law?

A

1990

188
Q

Who required pharmacists to maintain patient medication records?

A

OBRA

189
Q

When was Medicare Part D created?

A

2003

190
Q

Which countries only have government insurance?

A

Britain and Taiwan

191
Q

Which countries have government and private insurance?

A

Germany and Japan

192
Q

Who has the lowest GDP in health care?

A

Taiwan

193
Q

What country has no HC premium?

A

Britain

194
Q

Describe Germany’s Co-pays

A

$15 every 3 months

195
Q

What countries have insurance tied to employers?

A

Japan and Germany

Health Services (2 decks)

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