Instructions:Decide whether each statement is true, false or uncertain and explain your answer.A few sentences should suffice.

1.If healthcare demand were completely inelastic, the "expected loss" associated with uncertain health risks would not be affected by insurance coverage.

2.The emergence of Minute Clinics is an example of the dynamic moral hazard problem that permeates healthcare in the US.

3.Under the standard definition of allocative efficiency, the benefits of a particular health service are measured by the expected health benefits of the service for that patient.

4.Under a FFS payment system, physicians have an incentive to encourage higher-priced treatments over lower-priced ones.

5.Technological developments and the rise of managed care made it attractive for physicians to practice in larger groups.

6.Premiums for private health insurance plans are set well above the AFP for those plans due to the high profit margins built into the premiums.

7.The high cost associated with developing new drugs is the main reason prices are so high for recently developed drugs.

Below is a list of 24 concepts we confronted over course.

a)vertical consolidation

i)QALYs

q)Medigap

b)licensure requirements

j)AFP

r)technical efficiency

c)value-based purchasing

k)Medicare Advantage

s)adverse selection

d)economies of scale

l)marginal revenue product

t)economies of scope

e)episode-based payments

m)price discrimination

u)moral hazard

f)WTP

n)value-based benefit design

v)horizontal consolidation

g)supply-side cost sharing

o)monopoly power

w)capitation

h)patient-centered medical homes

p)diagnostic related groups (DRGs)

x)risk-aversion

For each of the following statements, please indicate which concept (a-x) best applies.The same concept might apply to more than one statement.If you are unsure between multiple answers and want to offer an explanation, please do.Those explanations will be considered in granting partial credit.

Also, please note that items 12, 13, and 14 require more than one response.

1.Premiums for health plans sold on the new insurance exchanges have risen steeply in most markets because enrollments by healthy/young consumers were lower than expected.

2.Patents are crucial to the incentives for new drug developments.

3.An example of this is when hospitals are financially rewarded for having lower-than-expected readmission rates.

4.Why drug firms target discounts/rebates to poorer consumers.

5.A profit-maximizing firm should employ additional worker hours if market wages are less than this.

6.A way of categorizing hospitalized patients based on their condition and expected costs of hospital care.

7.The lowest premium an insurer could conceivably charge without expecting to lose money selling a particular health plan.

8.Supplemental coverage purchased by some enrollees in the traditional Medicare program.

9.Insurance consumers will accept a larger expected loss to reduce their exposure to very large losses they would otherwise face.

10.When technical efficiency can be improved by performing complementary activities within the same organization.

11.The general term for payment arrangements that financially discourage the utilization of higher cost treatments.

12.Specific types of payments that encourage cost containment.(Two concepts apply.Please indicate both.)

13.These terms represent ways one might measure the "value" of a healthcare service for a treated patient.(Two concepts apply.Please indicate both)

14.The merger of the Westside Cardiologist Practice and Eastside Cardiologist Practice allowed them to reduce aggregate operational costs, by sharing the costs associated with expensive diagnostic equipment, but also eliminated any competition in the local market for cardiology services.(Four concepts apply.Please indicate all four.)