Economics 436 Study Questions for Midterm Exam Professor Thornton
Health Economics Fall 2009
The midterm exam is scheduled for Wednesday, October 28. It covers the lecture material and required reading for sections 1 through 4 on the syllabus.
Definitions
Medical care services
Validation services
WHO definition of health
Overtreatment
Undertreatment
Mistreatment
Evidence-based medicine
Quality adjusted life years
Health outcome study
Risk factor
Health-producing input
P-value
These questions do not require complete sentence answers
1. List 3 distinct features that make the market for medical care services different from the market for a typical good or service.
2. List 2 alternative mechanisms a nation can use to socially organize medical care services.
3. List 2 types of uncertainty that characterize the market for medical care services.
4. List 3 types of outputs produced by the medical care industry.
5. List 2 dimensions of health.
6. List 3 important social problems that are said to exist in the U.S. healthcare system.
7. List 4 alternative measures of medical care spending.
8. List the two main types of evidence-based medicine.
9. List 3 often used measures of health status in health outcomes studies.
10. List the 4 objectives of a health outcome study.
11. List 3 reasons why the U.S. over consumes medical care services.
These questions can be answered in 3 to 6 sentences.
1. Health economists argue that an important characteristic of medical markets is demand uncertainty. What is demand uncertainty and why does it give rise to health insurance?
2. Many health economists argue that the relationship between patients and doctors in medical markets is not a typical producer/consumer relationship, but rather a principal/agent relationship. What is a principal/agent relationship and why might it occur in medical markets?
3. What is moral hazard? Why is moral hazard likely to exist in medical markets?
4. Explain how medical care services can increase the productive capacity of the economy.
5. Explain how medical care services can result in consumption benefits for the economy.
6. Explain the economic definition/concept of health.
7. Many health care experts argue that rapidly rising medical care spending is an important social problem. What is the nature of this social problem?
8. Do you believe nominal medical care spending or medical care spending as a percent of gross domestic product (GDP) is a better way to measure medical care spending in the U.S.? Justify your answer.
9. If you were a health policymaker whose objective is to maximize the welfare of society, how would you define unnecessary medical care. Justify your answer.
10. A RAND Corporation study estimated that 33% of medical care spending in the U.S. (approximately $700 billion per year) is unnecessary under the medical definition of unnecessary. If the RAND Corporation defined unnecessary medical care using the social economic welfare definition, do you believe the estimate of unnecessary medical care would be less than, equal to, or greater than 33%? Explain
11. Explain how the Hippocratic oath might contribute to over consumption of medical care services.
12. An important social problem that is said to exist in the health care system in the U.S. involves medical care access. Explain the nature of this social problem.
13. How do the COBRA laws of 1985 affect medical care access for patients without health insurance?
14. About 46 million Americans do not have health insurance. What sorts of people tend not to have health insurance?
15. A study by Hadley and Holahan (Health Affairs, 2003) estimates that a typical uninsured person in the U.S. consumes 40% less medical care than a typical insured person. Do you believe this study provides definitive evidence that the uninsured do not have access to an adequate amount of medical care services? Yes/no. Justify your answer.
16. From an economic point of view, do you believe the U.S. should extend health insurance coverage to the 46 million uninsured Americans? Yes/no. Explain. Make sure you use economic logic to answer this question.
17. Explain how overtreatment can lower the quality of medical care in the U.S.
18. Explain how biomedical research affects the health of the U.S. population.
19. Suppose that 200 subjects are randomly assigned to treatment and control groups, with 100 subjects in each group. The treatment group receives a cardiovascular drug, while the control group receives a placebo. Over a 5 year period, 4 subjects in the treatment group and 10 subjects in the control group die from heart disease. Calculate the relative risk of heart disease mortality for subjects who take the drug compared to those who don’t take the drug. Show your work. Interpret this risk measure. Exactly what information does relative risk give you?
20. What is a confounding factor? Give an example.
21. What is reverse causation? Give an example.
22. To study the effect of a new drug on heart disease, a researcher randomly assigns 20 individuals to a treatment group of 10 individuals who get the drug, and a control group of 10 individuals who get a placebo. What is the major limitation of this study?
23. What is the difference between an experimental health outcomes study and an observational health outcomes study?
24. Health outcomes studies find evidence that income has an independent causal effect on health. Provide an explanation of how having a higher income may cause better health, and having a lower income may cause worse health.
25. What are the general conclusions of the Whitehall studies of the health status of British civil servants?
These questions have no suggested limit; however, try to be concise and substantive
1. What is supplier induced demand. Explain how asymmetric information between patients and physicians in medical markets might result in supplier (physician) induced demand.
2. Do you believe doctors are perfect agents? Carefully discuss.
3. Explain (don’t just list) the five effects moral hazard has on the market for medical care.
4. Carefully explain how a medical care service, such as an additional coronary artery bypass surgery, can be necessary from a medical point of view, but unnecessary from an economic point of view.
5. Some healthcare experts argue that the practice of medicine is driven more by money than by science. Do you agree or disagree. Justify your answer.
6. Do you believe doctors should use evidence-based medicine when making medical decisions? Yes/No. Support your answer.
7. Explain (don’t just list) 3 reasons for the existence of overtreatment, undertreatment, and mistreatment, which healthcare experts believe lowers the quality of medical care in the U.S.
8. Three important social problems are said to exist in the healthcare system in the U.S. Which problem do you believe is the most important problem that should get top priority when reforming the healthcare system? Carefully explain.
9. Explain the difference between absolute risk, relative risk, and marginal risk as they apply to health outcomes. Which measure of risk is the most important to a patient when deciding whether to have a particular medical treatment?
10. Correlation studies find nations that utilize more medical care services tend to have shorter life expectancies, while nations that utilize fewer medical care services tend to have longer life expectancies. Discuss two plausible reasons for this negative correlation between medical care and health.
11. It is an empirical fact that rich people are healthier and live longer than poor people. Explain the reasons for this.
12. It is an empirical fact that more educated people are healthier and live longer than less educated people. Explain the reasons for this.
13. Some health care analysts argue that health care reform has little to do with the health status of the population. Do you agree or disagree with this argument? Support your answer.
14. Discuss the advantages and limitations of a randomized controlled experiment.
15. You have received a sizable grant from a pharmaceutical company to do a randomized controlled experiment to analyze the relationship between quercetin and heart disease. Quercetin is a phytochemical found in fruits like apples and blueberries. The pharmaceutical company has found a way to extract quercetin from fruit so it can be taken in pill form. What are the objectives of your study? Explain how you would do a randomized controlled experiment and use the information obtained to answer the questions that define your objectives.
16. Many healthcare experts believe the U.S. is experiencing flat-of-the-curve medicine. What is meant by the term flat-of-the-curve medicine? Discuss the methodology and findings of a randomized controlled experiment that provides evidence of flat-of-the-curve medicine.
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