Reference no: EM13995221

Part A-

Answer all questions in the space provided. Point values are in parentheses.

1. Information on the quality of health plans is valuable in its own right. However, knowledge of health plan quality is argued to increase employee price sensitivity with respect to health plans as well. How is this so? What evidence do you have for this effect?

2. Some have argued that larger out-of-pocket employee premium contributions are the result of more two-earner households in the labor market. Sketch out the economic argument for this result.

3. A number of managed care plans have identified "centers of excellence" for the provision of high cost surgical procedures. In some cases the managed care plans agree to pay travel costs for the patient and a caregiver to go several hundred miles to undergo the treatment. Discuss these practices in the context of the principles of selective contracting.

4. Many health policy analysts have argued that the tax treatment of employer sponsored health insurance is one of the fundamental reasons for high health care costs in the U.S. Trace the economic logic that leads from taxing employer-sponsored health insurance as income to reducing health care costs. What evidence can you bring to bear on this issue?

5. The advocates of consumer directed health plans (CDHPs) argue that they will reduce health care spending and make people more effective consumers of care. Describe the key elements of a CDHP and sketch the argument for how it results in lower spending. Summarize the evidence to date on the effectiveness of these plans.

Part B-

Answer all questions in the space provided. (Point values in parentheses.)

1. Many states are concerned about the pension and retiree health benefits obligations that arise from the promises that the states have made to state employees. Suppose the governor asked you to summarize the options for reducing the state's obligations for retiree health insurance.

A. Describe the nature of retiree health benefits typically provided to retirees by large public and private employers.

B. Suggest two proposals to reduce these costs to government. Briefly indicate why/how each proposal would save money.

C. What are the labor market consequences, if any, of your proposals in B?

2. Earlier this month the trustees of the Medicare Trust Fund presented their annual report and indicated that the Trust Fund will be exhausted by 2024, the same date as last year.

A. What does it mean to say that the "Trust Fund will be exhausted"?

B. Over the years, people on each side of the political aisle have proposed a "premium subsidy" plan to try to control Medicare's spending. What are the key features of a premium subsidy plan? How is it supposed to reduce Medicare spending?

3. Your aunt is 60 and thinking about her retirement. Her health is good, but she is on her own and wonders if she should buy a long term care policy. What do you advise her? (Be sure to explain your advice.)

4. The Patient Protection and Affordable Care Act (PPACA) gives states the opportunity to establish health insurance exchanges.

A. Describe three key decisions (of many) that the states have to make. Which option do you tentatively recommend for each decision? Why?

B. Discuss three options the states have for paying for the costs of running their exchange.