ChapC12 - 1 How to Study for Chapter 12 The Economics of...

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1 How to Study for Chapter 12 The Economics of Health Care Chapter 12 introduces some new concepts to allow analysis of the health care industry and the problems for the United States that exist in health care. 1. Begin by looking over the Objectives listed below. This will tell you the main points you should be looking for as you read the chapter. 2. New words or definitions and certain key points are highlighted in italics and in red color. Other key points are highlighted in bold type and in blue color. 3. You will be given an In Class Assignment and a Homework assignment to illustrate the main concepts of this chapter. 4. There are several new words in this chapter. Be sure to spend time on the various definitions. There are no new graphs. 5. The teacher will focus on the main technical parts of this chapter. You are responsible for the cases and the ways by which each case illustrates a main principle. 6. When you have finished the text, the Test Your Understanding questions, and the assignments, go back to the Objectives. See if you can answer the questions without looking back at the text. If not, go back and re-read that part of the text. When you are ready, take the Practice Quiz for Chapter 12. Objectives for Chapter 12 The Economics of Health Care At the end of Chapter 12, you should be able to answer the following questions: 1. What are the main problems facing American health care? 2. What is Medicare? What is Medicaid? 3. Explain why health care might be different from other industries? 4. What is meant by “asymmetric information” ? What is “supplier-induced demand” and what are its effects? 5. What effects does the existence of health insurance have on the health care industry? 6. In what ways does health care generate externalities? 7. In what ways does health care show the effects of monopoly power? 8. What are the effects of having many health care institutions operate on a non-profit basis? 9. What does it mean that one is “risk averse” ? 10. What is “comprehensive” health insurance and why is it comprehensive? 11. What is meant by “adverse selection” and what are its effects? 12. What is meant by the “Lemons Principle” and what are its effects? 13. What is meant by “moral hazard” and what are its effects? 14. Explain why health care costs have been rising so rapidly in recent years? Give as many reasons as you can. 15.Explain what is meant by “fee for service” . By a “Preferred Provider Organization” (PPO) . By a “Health Maintenance Organization (HMO) , What are the advantages and disadvantages of each? 16. What is “play or pay”? What is National Health Insurance? What are the advantages and disadvantages of each?
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