Prelim_1_2022

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Cornell University *

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2350

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Economics

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Apr 3, 2024

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Name: _______________________________ PAM 2350 Prelim Exam #1 September 20, 2022 There are 100 points on the exam. The point value for each question is in [brackets]. You have 1.5 hours to complete the exam. I. True/False: CIRCLE the correct answer [3 points each, for a total of 9] 1) True False According to Vivian Lee (The Long Fix ), after negotiations are concluded, private insurers usually pay very different amounts to different hospitals in the same city for the same service. 2) True False The average annual growth rate of medical spending in the U.S. has decreased in each of the last three decades (i.e., from the 1980’s to the 1990’s to the 2000’s to the 2010’s). 3) True False Feldstein argues in his textbook that in addition to requiring a deductible and co-payments/co-insurance, managed care plans also addressed moral hazard by requiring prior authorization for hospital admissions and second opinions for some surgeries. II. Multiple Choice: CIRCLE the correct answer or FILL IN the blank [3 points each, for a total of 9] 4) Rank spending by sector in the U.S. from lowest to highest: prescription drugs; hospital care; physician and clinical services a. Lowest __________________ b. Middle __________________ c. Highest __________________ 5) What region of the U.S. has relatively high uninsurance rates and relatively low life expectancy? a) The Northeast b) The Southeast c) The West coast

6) On most quality measures… a. Both the U.S. and other high-income countries have been improving over time, but the U.S. has been improving more slowly than in other countries. b. The U.S. has been getting worse while other high-income countries have been improving. c. The U.S. has been improving while other high-income countries have been getting worse. III. Short Answer [12 points each except for Questions #9 and #10, which are worth 11 points each] Feel free to use bullet points and/or incomplete sentences in this section. Please write your responses on the exam itself and continue in a white book if necessary (indicate the answer number in the white book if you continue your response there). 7) David Cutler estimates that technological advancements in treating low-birthweight babies increased the life expectancy of such babies by 15 years between 1950 and 2000. However, he estimates that the financial benefit of this advancement is only $350,000. What are 3 reasons why the estimated benefit is less than $1.5 million (i.e., less than 15 years multiplied by $100,000 per year)?

8) In the 1990s, why did many physicians agree to become a preferred provider in a managed care plan’s network (or an “in-network” provider) if they could have received a higher fee from the health plan by choosing not to be in the plan’s network? Make sure to explain why these physicians believed they were making a smart decision. 9) What would the Dartmouth Group researchers predict would happen to Medicare spending and the health of Medicare beneficiaries if the U.S. government reduced the number of specialist physicians, hospital beds, and operating rooms in regions that currently have high Medicare spending amounts (e.g., McAllen, Texas)? Why?

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