Why Does Medicare's Structure Contribute to Its Spiraling Costs

question 24

Multiple Choice

Why does Medicare's structure contribute to its spiraling costs?

• A)Medicare is a single-payer system, so the government both provides the health care and the payment.
• B)Medicare operates as a third-party insurer, so it cannot prevent patients, doctors, or hospitals from incurring costs ahead of time.
• C)Medicare provides a health care voucher to every beneficiary, and senior citizens lobby to increase the size of their vouchers.
• D)Medicare receives a fixed amount of funds every year, so at the end of the year the program spends all of its remaining money rather than return it to the Treasury department.
• E)By law, Medicare cannot verify the age of its recipients, so there are lots of people who sign up long before they are actually eligible.

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Definitions:

Socially Optimal Level

The socially optimal level is the quantity of production or consumption where the marginal social cost equals the marginal social benefit, maximizing overall welfare.

Policymakers

Individuals or groups responsible for making decisions and establishing regulations that guide the economic, social, and political governance of a society.

Marginal Benefit

The plus in satisfaction or usefulness someone gets by consuming an extra unit of a given product or service.

Socially Optimal

A situation in economics where resources are allocated in the most efficient way from a societal perspective.