D223 NURS 2650
Healthcare Policy & Economics
Objective Assessment Prep
(With Solutions)
2025
1
,A government implements a value-based purchasing program that
rewards hospitals for quality care instead of volume. What economic
principle best explains this shift? A) Fee-for-service B) Cost shifting C)
Pay-for-performance D) Capitation
Answer: C) Pay-for-performance
Rationale: Pay-for-performance aligns provider incentives with quality
and outcomes rather than quantity, encouraging efficient care.
2. Which healthcare financing model pools risk across a large population
to reduce individual financial uncertainty?
A) Out-of-pocket payments
B) Health savings accounts
C) Insurance pooling
D) Direct billing
Answer: C) Insurance pooling
Rationale: Insurance pooling spreads financial risk among many people to
protect individuals from large costs.
3. The Affordable Care Act introduced which mechanism to reduce the
uninsured rate in the U.S.?
A) Medicaid expansion
B) Increased out-of-pocket costs
C) Eliminated private insurance
D) Reduced funding for preventive services
Answer: A) Medicaid expansion
Rationale: Medicaid expansion under the ACA allowed more low-income
individuals to gain coverage, decreasing the uninsured rate.
4. Which cost-effectiveness analysis measure is commonly used to
compare health interventions?
A) Quality Adjusted Life Year (QALY)
2
, B) Net Present Value (NPV)
C) Return on Investment (ROI)
D) Income elasticity
Answer: A) Quality Adjusted Life Year (QALY)
Rationale: QALYs combine quality and quantity of life, helping to evaluate
the value of healthcare interventions.
5. What kind of market failure occurs when patients cannot accurately
assess the quality of healthcare services?
A) Externalities
B) Information asymmetry
C) Moral hazard
D) Adverse selection
Answer: B) Information asymmetry
Rationale: Providers typically have more information about care quality
than patients, which can lead to inefficient choices.
True/False
6. Capitation payment models encourage providers to offer more
services to patients to increase revenue.
False
Rationale: Capitation pays a fixed amount per patient, incentivizing
providers to control costs and avoid unnecessary services.
7. Healthcare policies focused on social determinants of health can
reduce long-term healthcare costs.
True
Rationale: Addressing social determinants like housing and education can
improve health outcomes and reduce expensive medical interventions.
8. Adverse selection occurs when insurers cannot distinguish between
high-risk and low-risk individuals.
True
3
Healthcare Policy & Economics
Objective Assessment Prep
(With Solutions)
2025
1
,A government implements a value-based purchasing program that
rewards hospitals for quality care instead of volume. What economic
principle best explains this shift? A) Fee-for-service B) Cost shifting C)
Pay-for-performance D) Capitation
Answer: C) Pay-for-performance
Rationale: Pay-for-performance aligns provider incentives with quality
and outcomes rather than quantity, encouraging efficient care.
2. Which healthcare financing model pools risk across a large population
to reduce individual financial uncertainty?
A) Out-of-pocket payments
B) Health savings accounts
C) Insurance pooling
D) Direct billing
Answer: C) Insurance pooling
Rationale: Insurance pooling spreads financial risk among many people to
protect individuals from large costs.
3. The Affordable Care Act introduced which mechanism to reduce the
uninsured rate in the U.S.?
A) Medicaid expansion
B) Increased out-of-pocket costs
C) Eliminated private insurance
D) Reduced funding for preventive services
Answer: A) Medicaid expansion
Rationale: Medicaid expansion under the ACA allowed more low-income
individuals to gain coverage, decreasing the uninsured rate.
4. Which cost-effectiveness analysis measure is commonly used to
compare health interventions?
A) Quality Adjusted Life Year (QALY)
2
, B) Net Present Value (NPV)
C) Return on Investment (ROI)
D) Income elasticity
Answer: A) Quality Adjusted Life Year (QALY)
Rationale: QALYs combine quality and quantity of life, helping to evaluate
the value of healthcare interventions.
5. What kind of market failure occurs when patients cannot accurately
assess the quality of healthcare services?
A) Externalities
B) Information asymmetry
C) Moral hazard
D) Adverse selection
Answer: B) Information asymmetry
Rationale: Providers typically have more information about care quality
than patients, which can lead to inefficient choices.
True/False
6. Capitation payment models encourage providers to offer more
services to patients to increase revenue.
False
Rationale: Capitation pays a fixed amount per patient, incentivizing
providers to control costs and avoid unnecessary services.
7. Healthcare policies focused on social determinants of health can
reduce long-term healthcare costs.
True
Rationale: Addressing social determinants like housing and education can
improve health outcomes and reduce expensive medical interventions.
8. Adverse selection occurs when insurers cannot distinguish between
high-risk and low-risk individuals.
True
3
