HCMG EXAM QUESTIONS AND ANSWERS LATEST
EDITION ALREADY GRADED A+
what are reasons the health care market doesn't function as properly?
Provider competition is limited, asymmetric information between doctors and consumers; consumer
doesn't feel the full cost, so they may be more inclined to use low value care
Low vs high value care
High value care: good outcomes and low cost
Low value care: outcomes do not outweigh the cost
What percentage of Medicare spending occurs in the last year of life?
25%
Why is it bad to spend so much on health care?
We could be spending more optimally, such that we can use the other money for other productive feats
explain the factors of cost-sharing
Deductible: an amt a patient must spend before insurer chimes in
Copay: patient pays a specific $ amount to see a provider
Coinsurance: patient pays a % of the bill
When do insurance markets work well?
When losses are not too rare and not too common; when losses are unambiguous and easy to assess;
when moral hazard is minimal; when information is symmetric
How to minimize moral hazard?
Cost-sharing!!! (RAND health experiment as an example)
How to calculate a "fair" premium
Premium = Psick x Csick (probability x cost)
Setting premiums - 3 approaches to pricing risk and explain
1. Individual risk rated (premium was tied to assumed future risk; now outlawed in the US)
2. Experience rated (employers past experience on their employees to set ESHI plans)
3. Community rated (uniform prices; can only cost discriminate on a few things (smoking, individual vs
family, where you live, age - lying ab smoking is insurance fraud)
Explain asymmetric information
Doctor knows more about the field, so if Dr. Says do X, I will do X. Also, doctor only knows what patient
tells them..
EDITION ALREADY GRADED A+
what are reasons the health care market doesn't function as properly?
Provider competition is limited, asymmetric information between doctors and consumers; consumer
doesn't feel the full cost, so they may be more inclined to use low value care
Low vs high value care
High value care: good outcomes and low cost
Low value care: outcomes do not outweigh the cost
What percentage of Medicare spending occurs in the last year of life?
25%
Why is it bad to spend so much on health care?
We could be spending more optimally, such that we can use the other money for other productive feats
explain the factors of cost-sharing
Deductible: an amt a patient must spend before insurer chimes in
Copay: patient pays a specific $ amount to see a provider
Coinsurance: patient pays a % of the bill
When do insurance markets work well?
When losses are not too rare and not too common; when losses are unambiguous and easy to assess;
when moral hazard is minimal; when information is symmetric
How to minimize moral hazard?
Cost-sharing!!! (RAND health experiment as an example)
How to calculate a "fair" premium
Premium = Psick x Csick (probability x cost)
Setting premiums - 3 approaches to pricing risk and explain
1. Individual risk rated (premium was tied to assumed future risk; now outlawed in the US)
2. Experience rated (employers past experience on their employees to set ESHI plans)
3. Community rated (uniform prices; can only cost discriminate on a few things (smoking, individual vs
family, where you live, age - lying ab smoking is insurance fraud)
Explain asymmetric information
Doctor knows more about the field, so if Dr. Says do X, I will do X. Also, doctor only knows what patient
tells them..
