MHIU Life and Health Insurance and IO of health

1. [MHIU-16] Which 2021 changes touched the dynamics discussed in the paper?

   1. A)  New incentives for states to expand Medicaid.

   2. B)  Removal of the income cap for premium subsidies.

   3. C)  Across-the-board reductions in APTCs.

   4. D)  Permanent elimination of CSRs.

   5. E)  None of the above.

new incentives for states to expAND medicaid 

1. MHIU-6] (Exactly One Correct Answer) In MHIU, premiums rise and then unraveling accelerates primarily because:

   1. A)  All buyers upgrade to gold plans.

   2. B)  Unsubsidized, relatively healthy buyers drop coverage.

   3. C)  Insurers eliminate bronze plans.

   4. D)  Subsidized buyers drop coverage first.

unsubsidze relatively healthy buyers drop coevrage

1. [MHIU-11] (Exactly One Correct Answer) Why could a transfer scheme that reimburses CSR-induced excess costs mitigate MHIU?

   1. A)  It would automatically increase APTCs for all enrollees.

   2. B)  It would eliminate moral hazard at the individual level.

   3. C)  It would keep those costs from being pooled into premiums paid by unsubsidized buyers.

   4. D)  It would encourage more silver loading.

it would keep those costs from being pooled into premiums paid by unsubsidized buyers

MHIU-2]

Which features are necessary for MHIU to operate as laid out in the paper’s framework?

A) Community rating that spreads average costs across the pool.

2. B)  Uniform subsidies for all income groups.

3. C)  Generous cost-sharing reductions that materially cut marginal prices for low-income enrollees.

4. D)  A segment of unsubsidized buyers paying full “sticker” premiums.

5. E)  None of the above.

 community rating that spreads average costs across the pool, generous cost-sharing reductions that materially cut marginal prices for low-income enrollees, a segment of unsubsidized buyers paying full sticker premiums

[MHIU-7]
A) Medicaid expansion that moves high-CSR enrollees off the exchanges.

Which interventions are highlighted as ways to neutralize the spillover from CSR-driven utilization?

2. B)  An adjustment/transfer mechanism specifically tied to moral-hazard costs.

3. C)  Introducing health-status pricing within the exchanges.

4. D)  Government reimbursement to insurers for CSR-induced excess costs.

5. E)  None of the above.

medicaid expansion that moves high-csr enrolled off the exchanges, an adjustment/transfer mechanism specially did to moral-hazard costs 

6. [MHIU-13] (Exactly One Correct Answer) The outcomes of MHIU (rising premiums, healthy exits) resemble adverse selection, but the initiator differs because MHIU is triggered by:

   1. A)  Narrow networks.

   2. B)  APTC cliffs.

   3. C)  Plan “cherry-picking” of healthy risks.

   4. D)  Subsidy-induced utilization changes rather than selection on risk at purchase.

subsidy-induced utilization changes rather than section on risk at purchase

6. [MHIU-15] Which statements are correct?

   1. A)  Silver loading raised bronze, silver, and gold premiums equally.

   2. B)  CSR benefits ended in 2018.

   3. C)  When silver premiums rose, APTCs fell.

   4. D)  Insurers lowered silver premiums in 2018 to attract CSR enrollees.

   5. E)  None of the above.

none of the above

6. [MHIU-3] (Exactly One Correct Answer) In the MHIU framework, the initial trigger that sets off the premium spiral is:

   1. A)  Insurers’ market power.

   2. B)  Higher utilization by subsidized enrollees because their out-of-pocket prices are low.

   3. C)  Influx of high-risk enrollees choosing rich plans.

   4. D)  A change in the APTC formula.

higher utilization by subsidies enrolled because their out-of-pocket price es are low 

6. [MHIU-12] (Exactly One Correct Answer) Suppose a government program covers breach-response costs at $0 deductible for small firms below an income cutoff, while cyber premiums for small firms are community-rated across the market. MHIU predicts:

   1. A)  Selection on risk is the only possible driver of exits.

   2. B)  Premiums fall as incidents become cheaper to handle.

   3. C)  No change because subsidies affect only the subsidized.

   4. D)  Unsubsidized low-risk firms drop coverage as average premiums rise.

unsubsidized low-risk firms drop coverages as average premium rises

6. [MHIU-14] In community-rated markets, MHIU raises premiums through which channels?

   1. A)  Average claims increase when subsidized utilization rises.

   2. B)  Healthy unsubsidized exits reduce cross-subsidy from low-cost members.

   3. C)  A price cap on silver automatically lowers APTCs.

   4. D)  Health-status rating offsets the cost growth.

   5. E)  None of the above.

average claim increase when subsidized utilization rises and healthy unsubsidized exits reduce cross-subsidy from low-cost members

11. [MHIU-4] (Exactly One Correct Answer) Under community rating in the exchanges, whose effective price is most sensitive to MHIU-induced cost increases?

    1. A)  Medicaid enrollees.

    2. B)  CSR recipients.

    3. C)  Unsubsidized enrollees paying full premiums.

    4. D)  Medicare beneficiaries.

unsubsidized enrollees paying full premiums 

11. [MHIU-17] (Exactly One Correct Answer) If a state moved from community rating to health-status pricing in its individual market, MHIU would likely:

    1. A)  Strengthen, because costs would be spread more broadly.

    2. B)  Be unchanged.

    3. C)  Turn into classic adverse selection and intensify automatically.

    4. D)  Weaken, because subsidized excess costs wouldn’t be fully spread across the whole pool.

weaken, because subsidized excess costs wouldn’t be fully spread across the whole pool

11. [MHIU-1] (Exactly One Correct Answer) Which ordered chain best captures the MHIU mechanism described in “Moral Hazard-Induced Unraveling”?

    1. A)  Generous subsidies lower out-of-pocket prices → subsidized utilization rises → costs spread via community rating → premiums rise → healthy unsubsidized exit → pool gets riskier → further premium hikes.

    2. B)  Generous subsidies → sicker people newly enroll → experience rating kicks in → premiums fall.

    3. C)  Elimination of subsidies → utilization rises → premiums rise → exit.

    4. D)  Risk adjustment fully offsets subsidy costs → premiums stable → no exit.

generous subsidies lower out-of-pocket prices → subside utilization rises → costs of spread via community rating →premiums rise →heALTHY unsusize exit → pool gets riskier → further premium hikes

11. [MHIU-5] (Exactly One Correct Answer) A city gives low-income riders very low copays on bus rides while maintaining a single, uniform monthly pass price for everyone. Ridership (and total cost) rises, the pass price is increased, and many unsubsidized light users drop the pass. This dynamic best matches:

    1. A)  Classic adverse selection.

    2. B)  Cream-skimming by the bus agency.

    3. C)  MHIU.

    4. D)  Perfect risk adjustment.

MIHU

11. [MHIU-8] (Exactly One Correct Answer) A university lets Pell-eligible students face near-zero copays at the campus clinic, but charges a uniform, optional health fee. Using the MHIU lens, which outcome is most likely if many non-Pell students can opt out?

    1. A)  Heavy users become less prevalent.

    2. B)  The fee falls because lower copays reduce total demand.

    3. C)  Uniform fees isolate everyone from others’ utilization.

    4. D)  Average costs rise; the fee goes up; opt-outs among non-Pell students increase; the pool destabilizes.

average costs rise: the fee group goes up": opt-outs among non pell students increase: the pool destabalizes

11. [MHIU-10] (Exactly One Correct Answer) The paper treats Medicaid expansion as a natural experiment because:

    1. A)  Expansion randomly assigned individuals to insurers.

    2. B)  Expansion varied across states and time and moved CSR-intensive enrollees off exchanges exogenously, shifting the

       risk pool.

    3. C)  Expansion changed the APTC formula.

    4. D)  Expansion eliminated community rating.

expansion varied across states and time and moved CSR-incenitve enrollees off exchanges exogenous, shifting the risk pool

1. [IO of Health-2] Under administered prices (e.g., the English NHS), competition tends to. . . (Select all that apply.)

   1. A)  Have no effect on clinical outcomes.

   2. B)  Improve management quality where hospitals face more nearby rivals.

   3. C)  Reduce heart-attack (AMI) mortality.

   4. D)  Raise overall spending materially.

   5. E)  None of the above.

improve management quality where hospitals face more nearby rivals and reduce heart-attack (AMI) mortality

1. [IO of Health-17] Under physician capitation and cost-control incentives, referral patterns and outcomes (Select all that ap- ply.)

   1. A)  Patients may travel farther

   2. B)  More referrals to lower-cost hospitals

   3. C)  Little evidence of significant quality decline in the settings studied

   4. D)  Consistently higher mortality at referred sites

   5. E)  None of the above.

patients may travel farther, more refers to lower-income hospitals, little evidence of significant quantity decline in the settings studied

1. [IO of Health-6] (Exactly One Correct Answer) All else equal, widespread enrollee inertia tends to:

   1. A)  Worsen adverse selection by hastening healthy exits from generous plans

   2. B)  Immediately lower premiums in all plans

   3. C)  Mitigate adverse selection by keeping some healthy enrollees in richer plans

   4. D)  Eliminate the need for risk adjustment

miitagete adverse selection by keeping some healthy enrolled in richer plans 

1. [IO of Health-9] Which statements are supported by the paper? (Select all that apply; it is possible none are correct.)

   1. A)  AWP laws strengthen insurer bargaining power.

   2. B)  With negotiated prices, competition unambiguously improves quality.

   3. C)  Under administered prices, more competition typically raises costs substantially.

   4. D)  “Option demand” means consumers pay only at point of service after they observe illness.

   5. E)  None of the above.

none of the above

5. [IO of Health-8] (Exactly One Correct Answer) Option demand outside health care—pick the best example:

   1. A)  Paying a clinic co-pay at the visit

   2. B)  Loading a pharmacy card only after you get sick

   3. C)  Purchasing a surgical bundle only after diagnosis

   4. D)  Paying an annual gym membership to retain access even if you might not go

paying an annual gym membership to retain access even if you might not go

5. [IO of Health-12] Downstream effects of insurer market power (Select all that apply.)

   1. A)  Associated with higher premiums in many markets

   2. B)  May encourage substitution toward nurses relative to doctors

   3. C)  Often accompanies a decline in the number of active carriers

   4. D)  Can push down physician earnings

   5. E)  None of the above.

associated with higher premiums in many markets, may encourage substitution towards nurses relative to doctors, often accompanies a decline in the number of active carriers, can push down physician earnings 

5. [IO of Health-7] (Exactly One Correct Answer) Analogy. Which procurement rule would most clearly weaken a buyer’s bargaining power (like AWP laws do for insurers)?

   1. A)  A strategy of deliberately narrow, curated vendor lists

   2. B)  Exclusive-auction rights letting the buyer drop high-price vendors

   3. C)  A policy allowing credible exclusion of select vendors

   4. D)  A statute forcing the buyer to contract with any vendor who meets preset terms

a statue forcing the buyer to contract with any vendor ho meets present terms

5. [IO of Health-15] Any Willing Provider (AWP) laws. . . (Select all that apply.)

   1. A)  Weaken insurers’ ability to threaten exclusion in negotiations.

   2. B)  Tend to increase overall health spending.

   3. C)  Reduce overall health spending.

   4. D)  Broaden networks by design.

   5. E)  None of the above.

weaken insurers’ ability to threaten exclusions in negotiations, tend to increase overall health spending, broaden network by design

5. [IO of Health-19] Affordable Care Act (ACA) mechanisms (Select all that apply.)

   1. A)  Exchanges aimed to reduce insurer competition.

   2. B)  Provider-side policies encouraged consolidation/integration (e.g., ACOs).

   3. C)  Exchanges were intended to boost competition among insurers.

   4. D)  More data availability made evaluation of reforms easier.

   5. E)  None of the above.

providers-side polices encouraged consolidation/integration, exchanges were intended to boot compete among insurers, and more data availability made evaluation of reforms easier 

5. [IO of Health-1] An insurer designs a narrower network (law permits selective contracting). What outcomes are most consistent with Gaynor, Ho, and Town? (Select all that apply.)

   1. A)  It necessarily violates any willing provider statutes.

   2. B)  It always improves patient access.

   3. C)  All else equal, it could support lower premiums.

   4. D)  It may strengthen the insurer’s ability to credibly threaten exclusion in bargaining.

   5. E)  None of the above.

all esle eqaul, it could support lower premiums and it may strengthen the insurers ability to credibly threaten exclusion in bargaining

11. [IO of Health-5] (Exactly One Correct Answer) When a worker chooses a plan months before any diagnosis, the purchase primarily reflects:

    1. A)  A point-of-service discount at time of treatment

    2. B)  A guarantee of fixed out-of-pocket costs regardless of use

    3. C)  A network that must include every local provider

    4. D)  The option value of access to a particular provider network

the option value to access to a particular provider network

11. [IO of Health-10] Features of the multi-stage framework (Select all that apply.)

    1. A)  Providers choose quality investments early.

    2. B)  Utilization and referrals typically occur within plan networks.

    3. C)  Consumers pick plans before they know specific future illnesses.

    4. D)  Insurers compete on both premiums and network breadth/quality.

    5. E)  None of the above

 Providers choose quality investments early, Utilization and referrals typically occur within plan networks, Consumers pick plans before they know specific future illnesses, Insurers compete on both premiums and network breadth/quality.

11. [IO of Health-14] Accountable Care Organizations (ACOs) (Select all that apply.)

    1. A)  Some savings come from steering to lower-priced providers.

    2. B)  Results are mixed across programs.

    3. C)  One risk is creating very large entities with stronger bargaining leverage.

    4. D)  Some ACOs cost more and some exited the program.

    5. E)  None of the above.

Some savings come from steering to lower-priced providers, Results are mixed across programs, One risk is creating very large entities with stronger bargaining leverage, Some ACOs cost more and some exited the program.

11. [IO of Health-3] When prices are negotiated, what can happen? (Select all that apply.)

    1. A)  Theory gives a simple “yes”: competition always raises quality under negotiated prices.

    2. B)  If competition focuses on price and patients poorly perceive quality, quality may fall.

    3. C)  UK reforms emphasizing price competition produced universal quality improvements.

    4. D)  New Jersey price deregulation was associated with higher AMI mortality.

    5. E)  None of the above.

if companies focuses on price and patients poorly perceive quality, quality may fall and New Jersey price deragukaiton was associated with higher AMI mortality

11. [IO of Health-13] Which statements are supported? (Select all that apply; it is possible none are correct.)

    1. A)  In Medicare Part D, errors persisted with no evidence of learning.

    2. B)  Hospital mergers routinely lower prices for consumers through economies of scale.

    3. C)  Not-for-profit status ensures post-merger prices remain near pre-merger levels.

    4. D)  Inertia generally worsens adverse selection.

    5. E)  None of the above.

none of the above 

11. [IO of Health-4] (Exactly One Correct Answer) Which sequencing best matches the multi-stage game in Gaynor, Ho, and Town?

    1. A)  Premiums → Quality → Consumer choice → Price & network → Utilization & referrals

    2. B)  Quality determination → Price & network determination → Premium determination → Consumer choice → Utilization

       & referrals

    3. C)  Price & network → Quality → Premiums → Utilization & referrals → Consumer choice

    4. D)  Consumer choice → Premiums → Utilization & referrals → Price & network → Quality

4

Quality determination → Price & network determination → Premium determination → Consumer choice → Utilization

& referrals

17. [IO of Health-20] (Exactly One Correct Answer) After gaining market power via merger, not-for-profit hospitals gener- ally:

    1. A)  Hold prices near pre-merger levels because of mission constraints.

    2. B)  Raise prices similarly to for-profit hospitals.

    3. C)  Expand charity care enough to offset price effects.

    4. D)  Keep unprofitable services open at substantially higher rates than for-profits.

raise prices similarly to for-profit hospitals

17. [IO of Health-18] Specialist market structure. Which specialties tend to have highly concentrated markets? (Select all that apply.)

    1. A)  General primary care

    2. B)  Oncology

    3. C)  Cardiology

    4. D)  Radiology

    5. E)  None of the above.

oncology, cardiology, radiology 

17. IO of Health-11] Which statements are supported? (Select all that apply; it is possible none are correct.)

    1. A)  AWP laws reduce spending.

    2. B)  Hospital mergers commonly lower prices due to efficiencies.

    3. C)  Hospital competition under fixed prices raised AMI mortality in England.

    4. D)  Insurer consolidation tends to increase physician earnings.

    5. E)  None of the above.

none of the above

17. [IO of Health-16] Medicare Part D choices. Which are supported? (Select all that apply.)

    1. A)  Those making the largest mistakes were most likely to switch and reduce costs the next year.

    2. B)  Beneficiaries over-focused on premiums relative to total costs.

    3. C)  Errors persisted with no evidence of learning.

    4. D)  The initial design offered a small, simple choice set.

    5. none of the above

those making the largest mistakes were most likely to switch and reduce coasts next year and beneficiaries over-focused on premiums relative to total costs

1. [Moral Hazard in Health-7] (Exactly One Correct Answer) A forward-looking diabetic considering an expensive new drug in November under a calendar-year plan is most likely to:

   1. A)  Be indifferent to month because only spot price matters

   2. B)  Always start immediately regardless of costs

   3. C)  Never consider timing; only physician preference matters

   4. D)  Delay initiation until January to avoid crossing into a high-price region this year

delay initiation until January to avoid crossing into a high-price region this year 

1. [Moral Hazard in Health-15] Which statements about the concentration of spending are supported by Einav Finkelstein (2018)? (Select all that apply.)

   1. A)  Consumer cost-sharing may have limited influence for much of the year for these patients

   2. B)  A small share of people accounts for a large share of total spending

   3. C)  High-spending patients often hit the OOP max early, facing near-zero marginal price later

   4. D)  Their behavior is fully shaped by the deductible even in December

consumer cost sharing may have limited influence for much of the year for these patients, small share of people accounts for a large share of total spending, high-spending patients often hit the OOP max early (facing near zero marginal price later)

1. [Moral Hazard in Health-9] Which statements correctly describe the RAND experiment?

   1. A)  Demand for care was exactly price-inelastic

   2. B)  No plan had an out-of-pocket maximum

   3. C)  Lower cost-sharing reduced utilization

   4. D)  Families were assigned to plans based on health status

   5. none of the above

none of the above

1. [Moral Hazard in Health-12] Which behaviors exemplify provider-side moral hazard discussed as an emerging focus by Einav Finkelstein (2018)? (Select all that apply.)

   1. A)  Discharge timing clusters at payment thresholds that change reimbursement

   2. B)  A surgeon prefers a higher-reimbursed implant mainly for revenue reasons

   3. C)  A patient fills extra prescriptions in December before thresholds reset

   4. D)  A hospital adds a marginal test after a patient has hit the OOP max

   5. E)  None of the above.

discharge timing clusters at payment thresholds that change reimbursement and a surgeon prefers a higher-remibused implant daily for revenue reasons  

5. [Moral Hazard in Health-10] Why might Medicaid coverage increase ED visits, consistent with the Oregon lottery results discussed by Einav

   Finkelstein (2018)? (Select all that apply.)

   1. A)  The ED’s legal treatment obligation (e.g., under federal law) reduces effective financial risk for patients

   2. B)  The time cost of ED visits necessarily falls with Medicaid

   3. C)  Primary-care copays always rise relative to ED under Medicaid

   4. D)  The patient-facing marginal price of an ED visit falls with coverage

   5. E)  None of the above.

 The ED’s legal treatment obligation (e.g., under federal law) reduces effective financial risk for patients and the patient-facing marginal price of an ED visit falls with coverage 

5. [Moral Hazard in Health-5] (Exactly One Correct Answer) A forward-looking patient starts intensive physical therapy earlier in the year because she expects to hit the OOP maximum by summer, making later visits effectively cheaper. Which concept from Einav
   Finkelstein (2018) best fits this behavior?

   1. A)  Dynamic (forward-looking) response to future prices

   2. B)  Adverse selection

   3. C)  Pure risk aversion with no price sensitivity

   4. D)  Ex-ante moral hazard

dynamic (forward-looking) responses to future prices

5. [Moral Hazard in Health-13] Which features describe the Oregon Health Insurance Experiment used in the literature?

   1. A)  Winners (offer) vs. non-winners served as treatment vs. control

   2. B)  It helped address adverse selection confounding

   3. C)  The design enabled causal estimates of utilization changes

   4. D)  A lottery created random “offers” of Medicaid

   5. E)  None of the above.

Winners (offer) vs. non-winners served as treatment vs. control, It helped address adverse selection confounding, The design enabled causal estimates of utilization changes, A lottery created random “offers” of Medicaid

5. [Moral Hazard in Health-8] (Exactly One Correct Answer) A city introduces a January–December dental plan with a coverage gap mid-year. Among forward-looking enrollees, what pattern is most plausible?

   1. A)  Perfectly even monthly spending regardless of thresholds

   2. B)  Indefinite delay of all care to avoid the gap permanently

   3. C)  No relation between spending distribution and the policy threshold

   4. D)  Bunching of annual spending just before the gap, with the bunching point tracking any policy threshold updates

bunching of annual spending just before the gap, with the bunching point tracking any policy threshold updates 

5. [Moral Hazard in Health-2] Which concept-to-example pair is correct?

   1. A)  Adverse selection → using more care once covered because marginal price fell

   2. B)  Ex-post moral hazard → skipping flu shots because insurance exists

   3. C)  Provider-side moral hazard → patients “bunching” at the donut-hole threshold

   4. D)  Ex-ante moral hazard → agreeing to extra tests after becoming ill because copays are low

   5. E)  None of the above.

none of the above

10. [Moral Hazard in Health-14] Why might a static (spot-price) model deliver a smaller drug-spending elasticity than a dynamic model in Einav

    Finkelstein (2018)? (Select all that apply.)

    1. A)  It infers elasticity mainly from local bunching near a kink

    2. B)  It ignores anticipatory timing and horizon effects

    3. C)  It implicitly downplays behavior once people expect to hit the OOP max

    4. D)  It fully captures forward-looking expectations

    5. E)  None of the above.

It infers elasticity mainly from local bunching near a kink, It ignores anticipatory timing and horizon effects, It implicitly downplays behavior once people expect to hit the OOP max

10. [Moral Hazard in Health-11] Which elements align with the consumption-smoothing purpose of insurance emphasized by Einav Finkelstein (2018)?

    1. A)  Allowing more generous coverage at high expenditure levels

    2. B)  Using OOP maximums to cap catastrophic risk

    3. C)  Using deductibles to keep incentives on small, routine spending

    4. D)  Reducing variance in consumption between healthy and sick states

    5. E)  None of the above.

 Allowing more generous coverage at high expenditure levels, Using OOP maximums to cap catastrophic risk, Using deductibles to keep incentives on small, routine spending, Reducing variance in consumption between healthy and sick states

10. Moral Hazard in Health-16] Which statements align with the “needs, not prices” view that Einav Finkelstein (2018) contrast with evidence? (Select all that apply.)

    1. A)  Surgery decisions are unaffected by prices

    2. B)  Patients only visit doctors when sick; prices are irrelevant

    3. C)  Preventive care must always fall when insured

    4. D)  People never adjust utilization when copays change

    5. E)  None of the above.

 Surgery decisions are unaffected by prices,  Patients only visit doctors when sick; prices are irrelevant, people never adjust utilization when copays change

10. [Moral Hazard in Health-19] (Exactly One Correct Answer) Which statement is not supported by the experimental evidence highlighted by Einav
    Finkelstein (2018)?

    1. A)  Lottery-based assignment enables credible causal inference

    2. B)  Insurance can increase use of preventive services

    3. C)  Lower cost-sharing increases utilization

    4. D)  Healthcare demand is completely unresponsive to price

healthcare demand is completely unresponsive to price

10. [Moral Hazard in Health-1] Which scenarios capture adverse selection, not moral hazard? (Select all that apply.)

    1. A)  A person chooses a plan anticipating long-term chronic needs

    2. B)  After coverage becomes more generous, the same person uses more care

    3. C)  Someone who expects high expenses chooses the richest plan

    4. D)  A hospital upcodes diagnoses to increase payment

    5. E)  None of the above.

a person choses a plan anticipating long-term chronic needs and someone who expects high expenses chooses the richest plan 

15. [Moral Hazard in Health-3] Which considerations are essential when designing insurance under the Einav Finkelstein (2018) lens?

    1. A)  Using structural models to forecast behavior under untried policies

    2. B)  Attending to provider incentives alongside patient cost-sharing

    3. C)  Recognizing that spending is highly concentrated among a few individuals

    4. D)  Balancing risk protection against incentive distortions

    5. E)  None of the above.

Using structural models to forecast behavior under untried policies, Attending to provider incentives alongside patient cost-sharing, Recognizing that spending is highly concentrated among a few individuals, Balancing risk protection against incentive distortions

15. [Moral Hazard in Health-17] (Exactly One Correct Answer) Which of the following is not one of the three common claims contrasted in Einav
    Finkelstein (2018)?

    1. A)  “Lower out-of-pocket prices raise utilization—standard demand response.”

    2. B)  “Public insurance always crowds out private insurance one-for-one.”

    3. C)  “Healthcare demand is largely inelastic—needs, not prices, drive care.”

    4. D)  “Insurance may reduce spending by enabling more preventive/chronic care management.”

“Public insurance always crowds out private insurance one-for-one.”

15. [Moral Hazard in Health-6] (Exactly One Correct Answer) Two otherwise similar retirees enroll in the same Part D plan—one in November, one in February. Holding health needs fixed, which statements are supported by Einav
    Finkelstein (2018)? (Select all that apply.)

    1. A)  Consumers are insensitive to time left in the contract year

    2. B)  The February enrollee tends to use less initially because the plan is “new” to them

    3. C)  Both should use exactly the same because spot prices are equal at sign-up

    4. D)  The November enrollee tends to use less initially because there’s less time to reach thresholds this year

the November enrollee tends to use less initially because less time to reach threshollds this year 

15. Moral Hazard in Health-4] Which pairing correctly matches concept → example?

    1. A)  Dynamic incentives → decisions made without regard to future prices

    2. B)  Provider-side moral hazard → patients time purchases to avoid threshold jumps

    3. C)  Adverse selection → physician discharges timed to payment rules

    4. D)  Ex-post moral hazard → patient exercises less before getting sick

    5. E)  None of the above.

none of the above

15. [Moral Hazard in Health-18] (Exactly One Correct Answer) Why is the presence of an out-of-pocket maximum in the RAND experiment significant for interpretation?

    1. A)  It ensures demand is inelastic at all spending levels

    2. B)  It makes all plans equivalent beyond the deductible

    3. C)  It eliminates differences in utilization across plans

    4. D)  It preserves insurance’s risk-protection function while testing incentive effects

it preserves insurance’s risk-protection function while testing incentive effects

1. [Pharmaceutical Formularies and Rebates-3] Under the paper’s manufacturer-indifference refinement, which are true?

   1. A)  The chosen formulary maximizes the joint payoffs of PBM + all manufacturers (given the refinement’s conditions)

   2. B)  Consumers are indifferent across drugs

   3. C)  A manufacturer’s rebate can be contingent on rivals’ placement

   4. D)  A manufacturer paying a positive rebate earns the same profit across alternative equilibrium formularies

   5. E)  None of the above.

The chosen formulary maximizes the joint payoffs of PBM + all manufacturers (given the refinement’s conditions, A manufacturer’s rebate can be contingent on rivals’ placement, A manufacturer paying a positive rebate earns the same profit across alternative equilibrium formularies

1. [Pharmaceutical Formularies and Rebates-12] About the demand model used for statins, which statements are accurate?

   1. A)  There are no switching costs

   2. B)  Statins are modeled as unrelated goods (no substitution)

   3. C)  Demand is modeled as directly responding to list prices paid by manufacturers

   4. D)  Retail vs mail order channel is irrelevant

   5. E)  None of the above.

none of the above

1. [Pharmaceutical Formularies and Rebates-10] Which factors shape equilibrium rebate predictions?

   1. A)  Substitutability across drugs (demand system)

   2. B)  Who makes the first offer in bargaining

   3. C)  The PBM’s available tier structure and ability to exclude

   4. D)  Manufacturers’ disagreement profits

   5. E)  None of the above.

Substitutability across drugs (demand system), Who makes the first offer in bargaining, The PBM’s available tier structure and ability to exclude, Manufacturers’ disagreement profits

1. [Pharmaceutical Formularies and Rebates-8] Under a two-tier branded formulary, which mechanisms raise negotiated re- bates?

   1. A)  Regulator-enforced PBM–manufacturer collusion

   2. B)  Manufacturers paying to avoid worse disagreement outcomes

   3. C)  The credible threat of being placed on a less preferred tier

   4. D)  Automatic government price caps on brands

   5. E)  None of the above.

manufactures paying to avoid worse disagreement outcomes and the credible threat of being placed on a less preferred tier 

5. [Pharmaceutical Formularies and Rebates-2] Under the MPTD design highlighted in the study/discussion:

   1. A)  Large list-price gaps make branded choices much more expensive out-of-pocket

   2. B)  The member also pays the brand–generic list-price difference

   3. C)  The design creates a strong incentive to use the generic

   4. D)  The member pays their normal generic copay if they choose the brand

   5. E)  None of the above

Large list-price gaps make branded choices much more expensive out-of-pocket, The member also pays the brand–generic list-price difference, The design creates a strong incentive to use the generic, The member pays their normal generic copay if they choose the brand

5. [Pharmaceutical Formularies and Rebates-4] (Exactly One Correct Answer) An employer hires a PBM to rein in drug spending. What is the primary lever the PBM uses to induce branded manufacturers to offer rebates?

   1. A)  Pharmacy acquisition-cost audits

   2. B)  Formulary tiering of branded drugs

   3. C)  Government-mandated statutory rebates

   4. D)  Setting list prices

formulary tiering of branded drugs

5. [Pharmaceutical Formularies and Rebates-18] Which statements are supported by the study’s theory + empirics?

   1. A)  Tier placement substantially shifts branded statin volume

   2. B)  PBMs do not negotiate rebates

   3. C)  The PBM’s disagreement threat influences rebate size

   4. D)  Demand includes switching costs for molecule and channel

   5. E)  None of the above.

Tier placement substantially shifts branded statin volume, The PBM’s disagreement threat influences rebate size, Demand includes switching costs for molecule and channel

5. [Pharmaceutical Formularies and Rebates-11] In the manufacturer-first-offer variant, which statements are accurate?

   1. A)  Tiering becomes unnecessary

   2. B)  Rebates rise above the PBM take-it-or-leave-it case

   3. C)  Consumer welfare is guaranteed to be higher

   4. D)  Rebates are unchanged

   5. E)  None of the above.

none of the above

5. [Pharmaceutical Formularies and Rebates-17] Why is complete exclusion of widely used statins rare in practice, even if powerful in theory?

   1. A)  Manufacturer coupons legally prohibit exclusion

   2. B)  Employers value breadth of coverage for their members

   3. C)  PBMs compete to offer attractive coverage to employer clients

   4. D)  Federal law forbids exclusions in employer plans

   5. E)  None of the above.

Employers value breadth of coverage for their members and PBMs compete to offer attractive coverage to employer clients

5. [Pharmaceutical Formularies and Rebates-7] (Exactly One Correct Answer) Why do tier changes for statins provide relatively “clean” variation for demand estimation in the Princeton data?

   1. A)  They occur only on January 1 each year

   2. B)  They follow pharmacy closures

   3. C)  They are triggered by manufacturer coupons

   4. D)  They often coincide with generic entry

they often coincide with generic entry 

11. Pharmaceutical Formularies and Rebates-1] In an employer-sponsored setting, a PBM balances:

    1. A)  Enrollees’ access and out-of-pocket costs

    2. B)  The marketability/competitiveness of the benefit to employers

    3. C)  Contractual pass-through of rebates to the sponsor

    4. D)  The sponsor’s total drug spend

    5. E)  None of the above.

Enrollees’ access and out-of-pocket costs, The marketability/competitiveness of the benefit to employers, Contractual pass-through of rebates to the sponsor, The sponsor’s total drug spend

11. [Pharmaceutical Formularies and Rebates-9] (Exactly One Correct Answer) If the manufacturers make the first offer (instead of PBM take-it-or-leave-it), the model predicts rebates will tend to be:

    1. A)  Unchanged

    2. B)  Lower

    3. C)  Negative

    4. D)  Higher

lower

11. [Pharmaceutical Formularies and Rebates-15] (Exactly One Correct Answer) Which branded statins anchor the empirical application?

    1. A)  Nexium and Prilosec

    2. B)  Lipitor and Crestor (plus Vytorin)

    3. C)  Humira and Enbrel

    4. D)  Jardiance and Ozempic

Jupiter and creator (plus Vytorin) 

11. [Pharmaceutical Formularies and Rebates-14] Which design choices can reduce PBM leverage in the model?

    1. A)  Allowing complete exclusion from coverage

    2. B)  Publishing the confidential rebate contracts

    3. C)  Collapsing to one branded tier

    4. D)  Adding a middle branded tier that softens the “punishment” formulary

    5. E)  None of the above.

collopasng to one branded tier and adding a middle branded tier that softens the punishment formulary

1. [Agents and Brokers-19] Regarding the data strategy:

   1. A)  The study adds claims-level utilization data for each employee to model moral hazard directly

   2. B)  MEPS-IC provides employer-level outcomes such as offering and premiums

   3. C)  NAHU provides a roster of health insurance agents/brokers by geography

   4. D)  Merging employer outcomes with broker counts helps link intermediary supply to firm decisions

MEPS-IC provides employer-level outcomes such as offering and premiums, NAHU provides a roster of health insurance agents/brokers by geography, Merging employer outcomes with broker counts helps link intermediary supply to firm decisions

1. [Agents and Brokers-7] ]Which policy moves are described as potentially fostering broker competition?

   1. A)  Licensing reciprocity or standardization across states

   2. B)  Capping the number of licensed brokers per county

   3. C)  Mandating that all small-group sales bypass brokers entirely

   4. D)  Easing entry barriers that limit brokers in low-competition markets

licensing reciprocally or standardization across states and easing entry barriers that limit brokers in low-competiotn markets 

1. [Agents and Brokers-6] (Exactly One Correct Answer) A boutique winery hires a broker who is paid a percentage of the premium by the insurer. What core incentive problem can arise?

1. A)  Winner’s curse

2. B)  Bertrand paradox

3. C)  Principal–agent misalignment

4. D)  Time inconsistency

principal-agent misalignment

[Agents and Brokers-10] (Exactly One Correct Answer) Fill in the methodology: The authors use [ variable and check validity by confirming [ ].

1. A)  County unemployment rate; identical effects for small and large firms

2. B)  Yelp reviews of brokers; no effect on small-firm outcomes

3. C)  Number of brokers serving large firms; no effect on large-firm outcomes

4. D)  County HHI of insurers; strong effects on large-firm outcomes

] as an instrumental

number of brokers serving large firms; no effect on large-firm outcomes

[Agents and Brokers-9] How might the ACA’s SHOP exchanges interact with brokers, per the paper?

1. A)  SHOP legally prohibits broker involvement

2. B)  If SHOP becomes highly transparent and user-friendly, reliance on brokers could fall

3. C)  Brokers can guide employers to and through SHOP options

4. D)  SHOP automatically raises broker commissions

If SHOP becomes highly transparent and user-friendly reliance on brokers could fall and brokers can guide employers to and through shop options 

6. [Agents and Brokers-15] Why can more intense broker-to-broker competition reduce commission-driven bias?

   1. A)  Competition forces insurers to mandate identical commissions across all plans

   2. B)  Greater risk of client churn if value isn’t delivered

   3. C)  Competition eliminates principal–agent problems by removing commissions entirely

   4. D)  Employers can more easily switch among multiple eager brokers

Greater risk of client churn if value isn’t delivered and employers can more easily switch among multiple eager brokers

6. [Agents and Brokers-13] (Exactly One Correct Answer) A consultant claims that more broker competition increases premium dispersion by making the market more complex. Is this consistent with the paper?

   1. A)  No; dispersion falls as competition rises

   2. B)  Yes; dispersion rises with competition

   3. C)  The effect is mechanically zero under perfect competition

   4. D)  No relationship is possible by construction

no; dispersion falls as competitor rises

6. [Agents and Brokers-8] What are practical manifestations of reduced premium dispersion for small employers?

   1. A)  Lower risk of drastically overpaying relative to peers

   2. B)  A narrower range of quotes for similar coverage

   3. C)  Higher average premiums even when dispersion narrows

   4. D)  More hidden fees (“gotchas”) to make offers appear similar

lower risk of drastically overpaying relative to peers and a narrow range of quotes for similar coverage 

6. [Agents and Brokers-18] (Exactly One Correct Answer) Which distinction between agents and brokers is emphasized?

   1. A)  Agents are paid only by employers; brokers only by insurers

   2. B)  Agents typically represent multiple insurers; brokers represent one

   3. C)  Agents represent one insurer; brokers shop across many on behalf of the buyer

   4. D)  Agents work only in individual markets; brokers only in large-group markets

agents represented one insurer; brokers shop across many on behalf of the buyer

6. [Agents and Brokers-1] (Exactly One Correct Answer) A metal-fabrication shop with 28 employees finds that assembling side-by-side quotes and plan details takes dozens of hours and repeated outreach to carriers. The primary market friction illustrated is:

   1. A)  Externalities

   2. B)  Moral hazard

   3. C)  Adverse selection

   4. D)  Search frictions

search frictions

6. [Agents and Brokers-14] Which are examples of search frictions that brokers help miti- gate?

   1. A)  Complexity aligning plan design with employer constraints

   2. B)  High time cost of obtaining comparable quotes

   3. C)  Lack of a ready “one-stop shop” for small-group options

   4. D)  Difficulty evaluating provider networks and drug formularies

Complexity aligning plan design with employer constraints, High time cost of obtaining comparable quotes, Lack of a ready “one-stop shop” for small-group options, Difficulty evaluating provider networks and drug formularies

12. [Agents and Brokers-3] Which broker activities generate economies of scale in information gathering for many small clients?

    1. A)  Explaining complex rating and underwriting rules across carriers

    2. B)  Designing a benefits package that fits employer constraints

    3. C)  Curating a menu of plans after continuous market scanning

    4. D)  Setting physician fee schedules in local networks

Explaining complex rating and underwriting rules across carriers, Designing a benefits package that fits employer constraints, Curating a menu of plans after continuous market scanning

12. [Agents and Brokers-20] (Exactly One Correct Answer) Match the concepts to the scenarios: Scenario X: Choosing among many plan designs without perfectly predicting future health needs. Scenario Y: The hours of outreach and spreadsheeting

needed to A)

B) C) D)

assemble comparable quotes.
X = Adverse selection; Y = Externalities

X = Imperfect information; Y = Search frictions X = Moral hazard; Y = Imperfect information X = Search frictions; Y = Moral hazard

x = imperfect information; y = search fractions

14. [Agents and Brokers-4] Which tasks are commonly performed by agents/brokers for small employers?

    1. A)  Obtaining premium quotes

    2. B)  Creating a “curated marketplace” of options

    3. C)  Benefits design guidance

    4. D)  Explaining rating rules and compliance

Obtaining premium quotes, Creating a “curated marketplace” of options, Benefits design guidance, Explaining rating rules and compliance

14. [Agents and Brokers-2] (Exactly One Correct Answer) Case 1: A broker nudges a small firm toward a plan that pays a slightly higher commission. Case 2: After enrollment, employees use more care because out-of-pocket prices fall. These are, respectively:

    1. A)  Principal–agent problem; Moral hazard

    2. B)  Moral hazard; Principal–agent problem

    3. C)  Principal–agent problem; Adverse selection

    4. D)  Adverse selection; Moral hazard

principal-agent problem; moral hazard

14. [Agents and Brokers-5] (Exactly One Correct Answer) Which two data sources are merged to study employer outcomes and intermediary supply?

    1. A)  NHIS + HCUP

    2. B)  CPS + ACS

    3. C)  BLS JOLTS + QCEW

    4. D)  MEPS-IC (employer survey) + NAHU (agents/brokers)

MEPS-IC (employer survey) + NAHU (agents/brokers)

14. [Agents and Brokers-12] Which components are part of loading fees?

    1. A)  Broker commissions

    2. B)  Administrative costs

    3. C)  Insurer profit margins

    4. D)  Expected medical claims

Broker commissions, Administrative costs, Insurer profit margins

[Agents and Brokers-21] (Exactly One Correct Answer) Which policy trade-offs are highlighted when thinking about broker roles and modern platforms?

1. A)  Integrating broker expertise with exchanges vs. keeping direct, transparent access

2. B)  Calibrating incentives (e.g., commissions) vs. risking misalignment with employer interests

3. C)  Easier multi-state entry vs. maintaining quality/consumer protection standards

4. D)  Leveraging technology/AI vs. preserving human guidance for complex choices

Integrating broker expertise with exchanges vs. keeping direct, transparent access, Calibrating incentives (e.g., commissions) vs. risking misalignment with employer interests, Easier multi-state entry vs. maintaining quality/consumer protection standards, Leveraging technology/AI vs. preserving human guidance for complex choices

[Agents and Brokers-17] Through what channels might more broker competition lower premiums for offering firms?

1. A)  Competitive pressure to demonstrate savings to win/keep clients

2. B)  Plans drop core benefits by regulation when brokers are numerous

3. C)  Deeper search produces better matches and quotes

4. D)  A legal requirement that insurers cut administrative costs when more brokers enter

competitive pressure to demonstrate savings to win/keep clients and deeper search produces better matches and quotas

1. [Arrow Health Economics-1] (Exactly One Correct Answer) Which feature most clearly distinguishes demand for medical care from demand for everyday consumer goods?

   1. A)  Unpredictable necessity of care

   2. B)  Routine nature of purchase

   3. C)  Minor impact on income

unpredictable necessity of care 

1. [Arrow Health Economics-13] Trust in physicians is required because patients generally cannot:

   1. A)  Predict financial cost of future illness

   2. B)  Independently diagnose their own conditions

   3. C)  Fully assess treatment quality ex post

   4. D)  Verify provider competence without regulation

   5. E)  None of the above.

Predict financial cost of future illness, Independently diagnose their own conditions,Fully assess treatment quality ex post, Verify provider competence without regulation

1. [Arrow Health Economics-15] Which universal payment model does the article declare optimal in every context?

   1. A)  Pure fee-for-service without insurance

   2. B)  Cryptocurrency-based direct payments

   3. C)  Barter exchange between patients and doctors

   4. D)  Mandatory capitation with zero cost-sharing

   5. E)  None of the above.

none of the above

1. [Arrow Health Economics-7] Uncertainty in outcomes causes patients to depend on physicians for which two roles?

   1. A)  Diagnosing their conditions

   2. B)  Guiding treatment decisions

   3. C)  Comparing clinic prices

   4. D)  Guaranteeing cures

   5. E)  None of the above.

diagnosing their conditions and guiding treatment decisions 

5. [Arrow Health Economics-11] Arrow identifies which factors as drivers of health-care market failure?

   1. A)  Uncertainty of illness incidence

   2. B)  Information asymmetry

   3. C)  Public-health externalities

   4. D)  Perfect competition

   5. E)  None of the above.

Uncertainty of illness incidence, Information asymmetry, Public-health externalities

5. Arrow Health Economics-6] Why is physician supply constrained, according to Arrow?

   1. A)  State licensing requirements

   2. B)  Lengthy and costly education

   3. C)  Low entry barriers

   4. D)  Predictable demand for services

   5. E)  None of the above.

state licensing requirements and lengthy ad costly education

5. [Arrow Health Economics-12] Which of the following concepts is directly analysed in the article:

   1. A)  Licensing barriers

   2. B)  Moral hazard

   3. C)  Adverse selection

   4. D)  Price discrimination

   5. E)  None of the above.

licensing barriers, moral hazard, adverse selection, price discrimination 

5. [Arrow Health Economics-14] The article claims health-care markets naturally reach efficient outcomes without oversight be- cause:

   1. A)  Patients accurately judge treatment quality

   2. B)  Illness incidence is predictable and budgetable

   3. C)  Free entry guarantees enough physicians

   4. D)  Price transparency ensures competitive equilibrium

   5. E)  None of the above.

none of the above

5. [Arrow Health Economics-9] Ideal insurance, as described, should:

   1. A)  Maintain incentives for healthy behaviour

   2. B)  Spread risk across a broad pool

   3. C)  Cover unpredictable catastrophic costs

   4. D)  Eliminate all out-of-pocket spending

   5. none of the above

Maintain incentives for healthy behaviour, Spread risk across a broad pool, Cover unpredictable catastrophic costs

5. [Arrow Health Economics-2] (Exactly One Correct Answer) “Collectivity orientation” in the article refers to the expectation that physicians will:

   1. A)  Place patient welfare above personal gain

   2. B)  Focus on consumer advertising

   3. C)  Maximize profit exclusively

   4. D)  Engage primarily in price discrimination

place patients welfare above personal gain 

11. [Arrow Health Economics-3] (Exactly One Correct Answer) Which source of market failure is highlighted as justifying policy intervention?

    1. A)  Constant marginal costs

    2. B)  Unlimited physician supply

    3. C)  Perfect competition among providers

    4. D)  Information asymmetry between patient and physician

information asymmetry between patents and physicians

11. [Arrow Health Economics-10] Economies of scale arise in healthcare because of:

    1. A)  Spreading capital costs over many patients

    2. B)  Ability to guarantee predictable demand

    3. C)  High fixed costs of advanced equipment

    4. D)  Centralization of specialised expertise

    5. E)  None of the above.

Spreading capital costs over many patients, High fixed costs of advanced equipment, Centralization of specialised expertise