FINALS

Question 1

Progressives were generally in favor of offering the so-called “Public Option” in the new Health Insurance Exchanges created by the 2010 Affordable Care Act. Provide the two main arguments advocates make for why the Public Option’s premium would have been cheaper than the premiums for other plans in the Exchange.

Answer 1

why the Public Option’s premium would have been cheaper than the premiums for other plans in the Exchange.

• Reduced administrative costs (Fixed cost spread out/no need for profits)
• Lower payment rates to providers.

Question 2

Has the growth over time in the number of surgeries been higher for inpatient surgeries or outpatient surgeries?

Answer 2

outpatient surgeries (Newer less-invasive technologies)

Question 3

Is healthcare spending as a percent of GDP in the United States higher, lower, or the same as healthcare spending as a percent of GDP in other high-income countries?

Is life expectancy in the United States higher, lower, or the same as life expectancy in other high-income countries?

Answer 3

• Healthcare spending as a percent of GDP is higher in the US than other high-income countries.
• Life expectancy is lower in the US than other high-income countries.

Question 4

Which of the following were viewed as primary reasons for why Bill Clinton’s 1993 Health Security Act did not ultimately pass: (FIX ANY THAT ARE WRONG)

• (a) The Clinton Administration left the drafting of the bill to Congress rather than handling it internally
• (b) Bill Clinton was too willing to compromise to a less-expansive piece of legislation
• (c) the economy worsened over time so people became even more anxious about their access to employment-based insurance
• (d) there was an increasing “backlash” against managed care and HMO plans
• (e) the general public was becoming very optimistic about the use of Accountable Care Organizations and didn’t want to see those efforts abandoned for an alternative approach. (You may identify more than one.)

Answer 4

Which of the following were viewed as primary reasons for why Bill Clinton’s 1993 Health Security Act did not ultimately pass

• The Clinton Administration was secretive in the drafting of the bill (Didn’t involve Congress)
• Bill Clinton was unwilling to compromise to a less-expansive piece of legislation
• The economy increased over time so people became even less anxious about their access to employment-based insurance
• there was an increasing “backlash” against managed care and HMO plans

Question 5

One of the more controversial aspects of the 2010 ACA is the individual mandate. In 2006, the Republican Governor of which state was supportive of implementing an individual mandate? In 2008, was Barack Obama or Hillary Clinton more supportive of the individual mandate?

Answer 5

One of the more controversial aspects of the 2010 ACA is the individual mandate. In 2006, the Republican Governor of which state was supportive of implementing an individual mandate? In 2008, was Barack Obama or Hillary Clinton more supportive of the individual mandate?

• Mitt Romney of Mass. was supportive of an individual mandate
• Clinton > Obama support for individual mandate
  
  • Obama only supported it for children

Question 6

The final lecture for the course presented some examples for instances where the benefits of higher healthcare spending generally exceed those higher costs and then presented some other examples where the benefits of higher healthcare spending do not generally exceed those higher costs. Some of these examples focused on changes in healthcare spending over time, while others focused on differences in the level of healthcare spending at a point in time. Which set of examples used which perspective of level versus change?

Answer 6

Examples for the benefits of higher spending exceeding those higher costs

• focused on changes in healthcare spending over time.

Examples for the benefits of higher healthcare spending not exceeding those higher costs

• focused on differences in the level of healthcare spending at a point in time.

Question 7

Which of the following are explicit adjustments that are made to Medicare’s DRG payment rate:

• (a) Disproportionate Share, also known as DSH;
• (b) malpractice premiums;
• (c) market-level HMO penetration rates;
• (d) hospital-specific readmission rates; and/or
• (e) Indirect Medical Education, also known as IME

Answer 7

Which of the following are explicit adjustments that are made to Medicare’s DRG payment rate:

• (a) Disproportionate Share, also known as DSH;
• (d) hospital-specific readmission rates; and/or
• (e) Indirect Medical Education, also known as IME

Question 8

In 2016, Democratic Presidential Candidate Bernie Sanders ran on a single-payer “Medicare for All” healthcare reform proposal. Is this proposal most similar to the healthcare system of Canada, the United Kingdom, or Germany?

Answer 8

Sanders’ single-payer “Medicare for All” is most similar to the Canadian healthcare system

• with a government insurer and private providers

Question 9

Are optional Medicaid eligibility decisions made at the federal, state, or county level?

Answer 9

Medicaid eligibility decisions are made at the state level

Question 10

Why was the high risk pool provision of the 2010 Affordable Care Act temporary?

That is, why didn’t it continue into 2014 and beyond?

Answer 10

• Garunteed issue
• Community rating

It’s temporary because people with pre-existing chronic health conditions can’t be denied coverage or charged higher premiums as of 2014 due to the new community rating/guaranteed issue provisions.

Question 11

Was the 2003 Medicare Modernization Act passed by more Republicans or Democrats? Was the 2010 Affordable Care Act passed by more Republicans or Democrats?

Answer 11

MMA- Republicans

ACA- Democrats

Question 12

Would dropping the so-called “non interference“ clause for Medicare’s drug coverage make the United States more or less similar to other countries?

What would be the likely effect on US drug prices for Medicare beneficiaries if this clause were dropped?

Answer 12

Dropping Part D’s non-interference clause would make the US more like other countries, as other countries use a government agency to negotiate/determine prices with drug companies.

The likely effect of dropping this non-interference clause would be to lower US drug prices for Medicare beneficiaries.

Question 13

Consider a low-wage worker and a high-wage worker at the same employer.

Both take up the same health insurance plan offered by that employer.

As discussed in class, the tax exclusion for the high-wage worker > low-wage worker. Why?

Answer 13

Marginal tax rates are higher for high-income people than for low-income people.

(tax rates, tax bracket)

Question 14

Consider the 2010 Affordable Care Act’s provision to allow adult dependent children’s coverage on a parent’s private plan up to one’s 26th birthday.

About ten years ago, the Maryland state legislature actually passed a similar law to allow dependent coverage up to one’s 25th birthday; this Maryland provision was implemented in January 2008.

Besides improving access to coverage for 25-year-old dependents in Maryland (by changing this rule from one’s 25th to 26th birthday), did this particular provision regarding dependent coverage in the 2010 ACA affect any other large group of young adults under age 25 in Maryland? Explain your answer.

Answer 14

Yes, young adults whose parents work at self-insured firms would be impacted by the ACA because ERISA exempted the self-insured firms from the Maryland law.

Question 15

Order these three hypothetical premiums for a healthy person from the lowest premium to the highest premium:

• experience-rated premium
• community-rated premium w/o individual mandate
• community-rated premium w/ individual

(Interpret “lowest” and “highest” as the dollars one spends and not the number of people affected.)

Answer 15

Order these three hypothetical premiums for a healthy person from the lowest premium to the highest premium:

​​

1. Experience-rated premium
2. community-rated premium w/ individual mandate
3. community-rated premium w/o individual mandate

Question 16

Identify the “Part” of Medicare that uses RBRVS for provider reimbursement and explain the way in which that Part of Medicare is financed.

Answer 16

• Part B uses RBRVS payments to physicians
• financed by: general tax revenue and beneficiary premiums

Question 17

Consider the number of hospitals and physicians in the US compared to the other 30 high-income countries comprising the OECD.

• Is the number of hospital beds per capita in the United States above or below the median for the OECD?
• Is the number of physicians per capita in the US above or below the median for the OECD?

Answer 17

BOTH BELOW

• The number of hospital beds per capita in the US is below the median for the OECD.
• The number of physicians per capita in the US is below the median for the OECD.

Question 18

Which of the following were used to cover the increased spending in the 2010 Affordable Care Act:

• (a) increased taxes on high-income workers;
• (b) increased taxes on various companies comprising the healthcare industry;
• (c) increased taxes for cigarettes and alcohol; and/or
• (d) reductions in Medicare payments to providers.

Answer 18

Which of the following were used to cover the increased spending in the 2010 Affordable Care Act:

• (a) increased taxes on high-income workers;
• (b) increased taxes on various companies comprising the healthcare industry
• (d) reductions in Medicare payments to providers.

Question 19

Is the way in which most people obtain health insurance in the United States most similar to the healthcare system in Canada, the United Kingdom, or Germany? Explain.

Answer 19

Is the way in which most people obtain health insurance in the United States most similar to the healthcare system in Canada, the United Kingdom, or Germany? Explain.

• Germany
  
  • as insurance in the US is obtained from a private plan.
  • Germany has private plans (private employer-funded insurance)
  • Most in UK/ Canada have national public

Question 20

Advocates of tort reform claim that implementing a cap on malpractice awards could reduce federal healthcare spending on the Medicare program through two main mechanisms.

• What is the mechanism affecting Medicare’s price for physician care?
• What is the mechanism affecting Medicare’s quantity of physician care?

Answer 20

Advocates of tort reform claim that implementing a cap on malpractice awards could reduce federal healthcare spending on the Medicare program through two main mechanisms.

What is the mechanism affecting Medicare’s price for physician care?

• RBRVS fee schedule component for malpractice premiums

What is the mechanism affecting Medicare’s quantity of physician care?

• Expectation of less defensive medicine (protection from mal practice)

Question 21

Which 2010 Affordable Care Act provision was upheld by the Supreme Court in 2012? Which ACA provision was overturned by the Supreme Court in 2012?

Answer 21

Which 2010 Affordable Care Act provision was upheld by the Supreme Court in 2012?

• Individual mandate (Tax clause)

Which ACA provision was overturned by the Supreme Court in 2012?

• Mandatory Medicaid expansion (Spending clause)

Question 22

What is the primary benefit to the public of granting companies longer patents for drugs? What is the primary benefit to the public of granting companies shorter patents for drugs?

Answer 22

What is the primary benefit to the public of granting companies longer patents for drugs?

• stronger incentive for innovation: more time for monopoly profits

What is the primary benefit to the public of granting companies shorter patents for drugs?

• patients pay lower prices (for a generic) sooner once that patent expires

Question 23

In the Pharmaceutical Drug lecture, I discussed two strategies by payers to reduce drug prices: the use of Pharmacy Benefit Managers (PBMs) and a federally-mandated discount off of the Average Manufacturer Prices (AMP).

What do Medicaid, Medicare, and Employment-based use?

Answer 23

Pharmacy Benefit Managers (PBMs)

• Employer-based
• Medicare

federally-mandated discount off of the Average Manufacturer Prices (AMP)

• Medicaid

Question 24

Is Medicare’s financing for prescription drugs more similar to Medicare’s financing for inpatient hospital services or physician services? Explain your answer.

Answer 24

PART D is financed like part B for physician payments

• General tax revenue
• Beneficiary premiums

Hospital- Part A: Just payroll tax

Question 25

List the four different sources of coverage for prescription drugs that were available to seniors prior to the Medicare Modernization Act of 2003 establishing the Medicare drug benefit. (Note: This list of prior drug coverage was not explicitly provided in a lecture, but you should be able to infer these four types of coverage based on your understanding of the material provided.)

Answer 25

List the four different sources of coverage for prescription drugs that were available to seniors prior to the Medicare Modernization Act of 2003 establishing the Medicare drug benefit.

• (1) Supplemental Medicaid coverage for low-income seniors;
• (2) Supplemental retiree health benefits from prior employers;
• (3) Supplemental Medigap plans purchased on one’s own;
• (4) Part C / Medicare+Choice/ Comprehensive private Medicare HMOs / etc. plans.

Question 26

What are the three main mandatory groups covered by Medicaid?

Answer 26

What are the three main mandatory groups covered by Medicaid?

• Children/parents (or “families”),
• blind/disabled
• low income elderly.

Question 27

Is a Medicare beneficiary or a Medicaid beneficiary more likely to have a choice on whether he or she voluntarily enrolls in an HMO?

Answer 27

Is a Medicare beneficiary or a Medicaid beneficiary more likely to have a choice on whether he or she voluntarily enrolls in an HMO?

• Medicare beneficiaries always get a choice****
• While Medicaid beneficiaries are generally placed in HMOs due to the state’s choice

Question 28

Rank the following three average amounts from smallest to largest:

• the hospital “charge master” total amount,
• the average Medicaid payment,
• the average private insurer’s payment.

Answer 28

Rank the following three average amounts from smallest to largest:

• the average Medicaid payment,
• the average private insurer’s payment.
• the hospital “charge master” total amount,

Question 29

Consider the initial House and Senate versions of the 2010 Affordable Care Act (ACA). (Recall that the initial House version passed in November 2009, the initial Senate version passed in December 2009, and the final ACA was signed into law in March 2010.)

While the Senate and House versions both expanded Medicaid, there were important differences between the two versions.

• Was the House or Senate version of the legislation relatively more conservative?
• Was the House or Senate version more similar to the final ACA law?
• Was the so-called “public option” in the House version, Senate version, or neither version?

Answer 29

Was the House or Senate version of the legislation relatively more conservative?

• Senate- back door deals to gain votes

Was the House or Senate version more similar to the final ACA law?

• Senate- pleased house through reconciliation

Was the so-called “public option” in the House version, Senate version, or neither version?

• House- had public option
• Senate- CO-OP and OPM plans

Question 30

Provide the three main reasons why a Platinum plan has a higher premium than a Silver plan?

Answer 30

Provide the three main reasons why a Platinum plan has a higher premium than a Silver plan?

• Higher AV value (^Generosity)
• “adverse selection”
  
  • sicker people into the platinum plan
• “moral hazard”
  
  • in the platinum plan to increase overall spending

Question 31

Suppose that you work for a private PPO insurer selling coverage to small employers. Your company currently offers two different plans: the first has a

$500 deductible vs $1,500 deductible.

• Which of these two plans would qualify for a Health Savings Account to accompany the PPO plan?
• Would you expect low-income vs high-income people to benefit more from this HSA option?
• Why?

Answer 31

• $1,500 PPO: HDHPs can have HSAs
• High-income benefit more from HSA it is tax exempt
  
  • high income tax rate > low income tax rate
  • high-income people can afford to put more tax-free money into the account/ Can shield more money

Question 32

Consider the ways in which the federal ERISA legislation impacts private health insurance coverage at the state level.

• Describe how the ERISA law affects whether certain type of services (e.g., cancer screenings) are covered differently at small firms versus large firms.
• Describe how (if at all) the ERISA law affects whether certain firms offer any health insurance coverage to their workers.

Answer 32

ERISA exempts self-insured firms from state benefit mandates like cancer screenings

self-insured firms tend to be larger firms,

• can bare financial risk

Second, ERISA precludes a state from passing an employer mandate law specifying that firms have to offer coverage.

Question 33

What is a minimum medical loss ratio requirement?

Answer 33

What is a minimum medical loss ratio requirement?

• claims paid out/ premiums collected
  
  • ​​benefits/premiums​
• MINIMUM MLR determines how high premiums can be.
  
  • Aims to lower premiums by limiting admin overhead

Question 34

List three different ways in which an office-based physician can be paid for the privately-insured patients that physician sees.

Answer 34

List three different ways in which an office-based physician can be paid for the privately-insured patients that physician sees.

• FFS
• HMO capitation (IPA)
• HMO salary (Staff model

Question 35

Consider a city that has one public hospital, six nonprofit hospitals, and three for-profit hospitals.

Suppose that one of the nonprofit hospitals is currently attempting a conversion to become a for-profit hospital.

Suppose further than two of the for-profit hospitals are currently attempting to complete a merger.

What is a negative outcome that would result from the conversion (of the nonprofit to a for-profit hospital)?

What is a positive outcome that would result from the merger (of the two for-profit hospitals)?

Answer 35

Losing a NON PROFIT

• Decreased amount of charity care/ community benefit*

Merger

• Economies of scale (lower costs)
• Hospitals have “centers of excellence”
• Reduction in the “medical arms race”

Question 36

The Institute of Medicine (IOM) has defined three different types of problems regarding quality of care. What are these three types of problems?

Answer 36

IOM

• Misues
• underuse
• overuse

Question 37

Some argue that spending more money on healthcare providers is not problematic so long as there are associated health benefits worth that added cost.

The findings presented by Cutler and McClellan on heart attack treatments support this claim, while some secondary results from the RAND Health Insurance Experiment generally do not support this claim. Briefly, summarize both sets of findings and provide a short explanation to reconcile these seemingly different findings.

Answer 37

Cutler and McClellan

• More technology -> higher life expectancy
  
  • use of more expensive technology to treat heart attack patient increase their life expectancy (Cost > Benefits)
  • beneficial advances in care over time

RAND

• that people consuming more care (due to lower cost sharing) weren’t healthier
• overconsumption of potentially high-value services by low-value patients (“flat of the curve”) at a point in time

Question 38

What are the two commonly-given justifications for the ACA’s individual mandate?

Answer 38

• Mitigate adverse selection from community rating.
• Make the uninsured pay for their charity/uncompensated care.

Question 39

What is the relevance of “Harry and Louise” with respect to healthcare reform?

Answer 39

Harry and Louise was the insurance lobby’s political advertisement with the couple discussing their concerns with Bill Clinton’s proposal.

Question 40

Many Democrats wish the US healthcare system was reformed to look more like other OECD countries. Interestingly, though, the healthcare systems in Canada, Germany, and the United Kingdom are somewhat similar to the type of coverage for wage-earners, the elderly, and military veterans in the US, though not necessarily in that order. Match the country with the type of US citizen, making sure to provide the reason for each match.

Answer 40

• The American elderly’s Medicare is similar to Canada’s single payer system, as the providers are private
• The American wage-earners’ employment-based health insurance is similar to Germany’s system of private employer-funded insurance.
• The American military’s insurance is similar to the UK’s “socialized medicine” system, as providers are part of the government.

Question 41

The RAND Health Insurance Experiment documented a significant relationship between the magnitude of one’s total annual medical spending and the amount of beneficiary cost-sharing. Why was it necessary to conduct a randomized trial to observe the causal relationship the RAND researchers sought to measure?

Answer 41

Unhealthy people with high expected spending would otherwise be more likely to pick plans with lower amounts of cost sharing (i.e., “adverse selection”).

• sick people going to low cost-sharing plans or healthy people going to high cost-sharing plans

Question 42

Provide a brief explanation of the way in which providers covered by Medicare Part A are reimbursed.

Answer 42

Medicare pays hospitals a fixed/prospective payment based on the patient’s diagnosis.

IPPS DRGs

Question 43

Consider the payments to providers from Part B. Does the “disproportionate share” of this provider’s mix of patients impact the payment from CMS for a Medicare patient? Explain your answer.

Answer 43

No. DSH impacts DRG payments to hospitals, not the payments to physicians.

Physicians are RBRVS (Work, expenses, malpractice components)

Question 44

What happens if the tax revenue that the Medicare program uses to finance hospital care is different than the amount of the Medicare program’s spending on hospitals in a given year?

Answer 44

Tax > spending= money in HI fund

Tax < spending= money out of fund

Question 45

How might a Medicare beneficiary pay three different monthly premiums (i.e., one premium to one entity, a second premium to a second entity, and a third premium to a third entity)?

Answer 45

Medicare premiums

• Part B
• Part D
• Medigap

Question 46

People’s utilization level vs high/ low deductible

Answer 46

Adverse/ favorable selection

• High utilization= low deductible
• Low utilization= high deductible

Question 47

People in the lower deductible plans consume more because the net cost of care is lower (or people in the higher deductible plans consume less care).

What term?

Answer 47

Moral Hazard

Question 48

Who pays more for premiums- Large or Small Firms

Answer 48

Large pay less than Small

• Less administrative costs (fixed costs spread out)
• More negotiation power
• less underwriting (heterogeneous mix of people)

Question 49

Who benefits more from HSAs: High vs low income

Answer 49

High income- higher tax bracket

HSAs are tax exempt

Question 50

Provide potential explanations for why hospital LOS per admission has declined over time.

Answer 50

Decreased LOS

• New less-invasive technologies
• Medicare’s switch to DRGs/prospective payment
• private insurers’ use of capitation/managed care

Question 51

Suppose that you discovered that your private insurer pays the physician you see as a patient with fee-for-service reimbursement.

What general recommendation would you expect from your physician regarding follow-up visits? Why?

What general recommendation for follow-up visits would you expect if instead you learned that your private insurer paid your physician through capitation? Why?

Answer 51

FFS-> push services to make more more money (fee for each service)

Capitation-> fewer visits, providing more services decreases the money left over for physician income

Question 52

How can a state increase number of people covered by Medicaid?

Answer 52

A state increases the number of people eligible by raising the income threshold for eligibility

Question 53

Explain how a tax credit differs from a tax deduction

Answer 53

“tax = rate x (inc – ded)”

• A tax deduction lowers one’s taxable income, indirectly lowering the tax one owes

tax* = tax – credit

• a tax credit directly lowers the tax that one owes

Question 54

The 2010 Affordable Care Act included a provision to create Accountable Care Organizations. Describe the mechanism for how an ACO is paid.

Answer 54

Describe the mechanism for how an ACO is paid.

An ACO receives a penalty or reward based on whether their actual spending is above or below a risk-adjusted benchmark of expected spending and they meet certain quality indicators

"”keeping part of the difference between actual and expected spending””

Question 55

What similar challenge do the Medicare/ SS programs face over the next several decades?

Why is Medicare’s long-term outlook worsening quicker than Social Security’s long-term outlook?

Answer 55

Similar challenges

• increasing life expectancy
• demographic shift baby boomers

Medicare worse than SS

• spending per beneficiary grows at a higher rate for Medicare than Social Security

Question 56

What are the two primary ways in which a state’s per capita income affects how much it spends on the Medicaid program?

Answer 56

Per capita income-> medicaid spending

• lower state share of total spending, due to higher FMAP funds for lower-income states
• higher state spending because relative more people are eligible for Medicaid in low-income states

Question 57

Consider Medicaid program’s current Federal Medical Assistance Percentage (FMAP) amount. Is the FMAP lower, higher, or the same for the CHIP population relative to the Medicaid population?

Answer 57

FMAP CHIP > FMAP Medicaid