Health Economics — MCQs

Health Economics Indian Medical PG Practice Questions and MCQs

Question 31: The most comprehensive indicator of cost-effectiveness analysis is

A. Number of heart attacks avoided
B. Cost per life year gained
C. Number of life years gained
D. QALYs gained (Correct Answer)

Explanation: ***QALYs gained*** - **Quality-Adjusted Life Years (QALYs)** is the most comprehensive measure in cost-effectiveness analysis as it accounts for both the quantity and quality of life - Combines years of life added with a utility score reflecting health-related quality of life during those years - Provides a holistic view that captures both mortality and morbidity benefits of interventions *Number of heart attacks avoided* - Specific to a single clinical outcome and does not account for other health benefits or adverse effects - While important for cardiovascular interventions, it is too narrow to serve as a comprehensive cost-effectiveness indicator - Does not capture broader impact on overall health, quality of life, or longevity *Cost per life year gained* - Focuses on the quantity (length) of life gained but does not consider the quality of those gained years - An intervention might add years of life that are of poor quality, which this measure cannot differentiate - Less comprehensive than QALYs as it misses the health status dimension *Number of life years gained* - Only considers the extension of life without incorporating health status or quality of life during additional years - Provides an incomplete picture as it treats all life years equally regardless of health state - A longer life with significant disability would be valued the same as healthy years

Question 32: Which of the following is used to calculate the education index in the Human Development Index (HDI)?

A. 1/3rd weightage is given to adult literacy
B. In gross enrolment, only secondary education is considered, not primary education
C. 2/3rd weightage is given to gross enrollment
D. Mean years of schooling and expected years of schooling are used to calculate the education index (Correct Answer)

Explanation: ***Mean years of schooling and expected years of schooling are used to calculate the education index*** - The **education index** in the HDI is a composite of **mean years of schooling** (for adults aged 25 and older) and **expected years of schooling** (for children of school-entering age) - This approach provides a comprehensive measure of both **past educational attainment** and **future educational opportunities** - The two indices are combined using a **geometric mean** to create the overall education index *1/3rd weightage is given to adult literacy* - While adult literacy was a component of the **original HDI education index (pre-2010)**, it has been replaced by mean years of schooling for a more nuanced measure - The current methodology focuses on actual and expected years of formal education rather than simple literacy rates *In gross enrolment, only secondary education is considered, not primary education* - The HDI utilizes **expected years of schooling**, which incorporates **all levels of education**, including primary, secondary, and tertiary - It does not selectively consider only secondary education for gross enrollment *2/3rd weightage is given to gross enrollment* - In the **old HDI methodology (pre-2010)**, adult literacy rate had 2/3rd weightage and gross enrollment ratio had 1/3rd weightage - In the **current HDI**, the education component is calculated using the **geometric mean** of two equally weighted normalized indices: the mean years of schooling index and the expected years of schooling index - There is no longer a 2/3rd weightage system in the current methodology

Question 33: Human Poverty Index includes all except?

A. Knowledge
B. Standard of living
C. Longevity
D. Infant mortality (Correct Answer)

Explanation: ***Infant mortality*** - The **Human Poverty Index (HPI)** focuses on deprivation in basic dimensions of human life including longevity, knowledge, and standard of living. While infant mortality reflects health and living conditions, it is not a direct component used in calculating the HPI. - Instead, the HPI uses other indicators like **probability at birth of not surviving to age 40** (for HPI-1) or **probability at birth of not surviving to age 60** (for HPI-2) to measure deprivation in longevity. *Knowledge* - **Deprivation in knowledge** is a core component of the HPI, typically measured by the **adult illiteracy rate**. - This indicator assesses the lack of basic education and the inability to participate fully in society. *Standard of living* - **Deprivation in standard of living** is another key dimension, measured by a composite of several factors. - These typically include the **percentage of people without access to safe water**, the **percentage of people without access to health services**, and the **percentage of underweight children under five years of age**. *Longevity* - **Deprivation in longevity** is a fundamental pillar of the HPI, indicating the vulnerability to death at an early age. - It is measured by the **probability at birth of not surviving to age 40** (HPI-1) or **probability at birth of not surviving to age 60** (HPI-2).

Question 34: A factory of 30 persons has monthly wage bill of Rs 30,000. According to ESI Act, what amount will the employer pay as ESI contribution every month?

A. 5000 Rs
B. 2000 Rs
C. 1425 Rs
D. 975 Rs (Correct Answer)

Explanation: ***975 Rs*** - As per the **Employees' State Insurance (ESI) Act** (current rates effective from July 2019), the employer's contribution rate is **3.25% of the total wages** paid. - For a monthly wage bill of Rs 30,000, the employer's ESI contribution would be 3.25% of 30,000 = **Rs 975**. - The total ESI contribution (employer + employee) is **4.00%**, with employer paying 3.25% and employee paying 0.75%. *1425 Rs* - This value was based on the **old employer contribution rate of 4.75%** (before July 2019). - The current rate is **3.25%**, making this amount incorrect under the present ESI Act provisions. *5000 Rs* - This value is significantly higher than the statutory employer contribution rate under the **ESI Act**. - It represents approximately **16.67%** of wages, which is far above the actual rate. *2000 Rs* - This amount exceeds the standard **3.25% employer contribution** specified by the ESI Act. - It represents approximately **6.67%** of the monthly wage bill, which does not align with current statutory rates.

Question 35: Based on healthcare utility values and life expectancy, which of the following measures can be calculated? Consider a scenario where the average life expectancy for a woman in Japan is 87 years, and there is an increase in life expectancy due to healthcare advancements.

A. HALE
B. DALY
C. DFLE
D. QALY (Correct Answer)

Explanation: ***QALY*** - **Quality-Adjusted Life Years (QALYs)** combine the length of life with the **quality of life** lived, taking into account healthcare utility values (e.g., from 0 for dead to 1 for perfect health). - An increase in life expectancy due to healthcare advancements, coupled with assumed utility values, directly enables the calculation of QALYs gained or lost. *HALE* - **Health-Adjusted Life Expectancy (HALE)** is a measure of the average number of years that a person can expect to live in "**full health**" by adjusting for years lived in less than full health due to disease or injury. - While it incorporates health status, it specifically focuses on time lived in full health rather than the utility-weighted quality of life over the entire lifespan as QALYs do. *DALY* - **Disability-Adjusted Life Years (DALYs)** measure the total number of healthy years lost due to disease, disability, or premature death. - DALYs are a measure of disease burden, quantifying years lost, whereas QALYs are a measure of health gains or health states. *DFLE* - **Disability-Free Life Expectancy (DFLE)** measures the expected number of years an individual will live without disability. - While it considers the absence of disability, it does not incorporate the concept of "utility values" or varying degrees of health-related quality of life beyond a binary disabled/non-disabled state, as QALYs do.

Question 36: In which of the following methods of management is the benefit measured in natural units?

A. Network analysis
B. Cost-benefit analysis
C. Program budgeting system
D. Cost-effectiveness analysis (Correct Answer)

Explanation: ***Cost-effectiveness analysis*** - In **cost-effectiveness analysis**, the benefits of a healthcare intervention are measured in **natural units** (e.g., lives saved, years of life gained, cases cured, reduction in symptoms). - This method compares the costs of different interventions to achieve a specific health outcome, expressed in a non-monetary unit. *Network analysis* - **Network analysis** is a project management technique used to plan and control complex projects, often for scheduling tasks and identifying critical paths. - Its primary focus is on task dependencies and timelines, not on measuring benefits of management interventions in natural units. *Cost-benefit analysis* - In **cost-benefit analysis**, both the costs and the benefits of an intervention are converted into **monetary units**. - This allows for a comparison where a project is deemed beneficial if its monetary benefits outweigh its monetary costs. *Program budgeting system* - A **program budgeting system** is a financial planning and management tool that links expenditures to the achievement of specific program objectives. - While it focuses on resource allocation and outcomes, it does not primarily measure benefits in natural health units.

Question 37: Which of the following is not a component of the Human Development Index (HDI)?

A. Income
B. Knowledge
C. Longevity
D. Environmental sustainability (Correct Answer)

Explanation: ***Environmental sustainability*** - Environmental sustainability is not directly included as a component in the standard HDI calculation. - While it's a critical aspect of development, the HDI focuses specifically on health, education, and living standards. *Income* - **Income** as a component of the HDI is represented by Gross National Income (GNI) per capita (PPP $). - This indicator reflects the standard of living and purchasing power within a country. *Knowledge* - The **knowledge** component of the HDI is measured by mean years of schooling and expected years of schooling. - This aims to reflect the level of education and human capital in a country. *Longevity* - **Longevity** is measured by life expectancy at birth. - This component assesses the health and well-being of a population.

Question 38: Which analysis method categorizes items based on their expenditure, identifying a small number of high-value items and a large number of low-value items?

A. ABC analysis (Correct Answer)
B. SUS analysis
C. HML analysis
D. VED analysis

Explanation: ***ABC analysis*** - **ABC analysis** classifies inventory items into three categories (A, B, and C) based on their annual consumption value, identifying a small percentage of items that account for most of the expenditure. - **Category A** items are high-value and high-priority (typically 10-20% of items accounting for 70-80% of expenditure), while **Category C** items are low-value and low-priority (50-70% of items accounting for 5-10% of expenditure), fitting the description of a small number of high-value items and a large number of low-value items. - Based on the **Pareto principle (80/20 rule)** in inventory management. *SUS analysis* - **SUS analysis** categorizes items based on their **procurement characteristics**: **Scarce** (difficult to procure), **Urgent** (needed immediately), and **Seasonal** (required at specific times). - It focuses on availability and timing of procurement rather than expenditure or consumption value. - Does not classify items by their monetary value or identify high vs. low-value items. *HML analysis* - **HML analysis** categorizes items based on their **unit price** (High, Medium, Low), not their total expenditure or annual consumption value. - While it considers value, it doesn't prioritize items by the total financial impact or identify the expenditure pattern described in the question. *VED analysis* - **VED analysis** classifies inventory items based on their **criticality** (Vital, Essential, Desirable) for operational needs, particularly in healthcare where stockouts can have severe consequences. - It focuses on the importance of an item for function and patient care, rather than its monetary expenditure or value.

Question 39: Which body is primarily responsible for recommending the distribution of health sector financial resources between central and state governments in India?

A. Department of Expenditure in the Union Government
B. Finance Commission (Correct Answer)
C. Inter–State Council
D. Planning Commission

Explanation: ***Finance Commission*** - The **Finance Commission** is a constitutional body in India whose primary role is to recommend the distribution of **financial resources** between the union and state governments, including those allocated to the health sector. - Its recommendations cover **tax devolution**, grants-in-aid, and measures to improve the **financial health** of states, which directly impacts health sector funding. *Department of Expenditure in the Union Government* - While the **Department of Expenditure** manages government spending, it operates within the framework of recommendations made by the Finance Commission regarding resource distribution. - Its role is to **implement** and manage the approved budgetary allocations rather than to independently recommend the division of financial resources between the center and states. *Inter–State Council* - The **Inter-State Council** is constituted to investigate and discuss subjects of common interest between the Union and states, or among states, and to make recommendations for **better coordination** of policy and action. - It does not primarily deal with the **distribution of financial resources** but rather with issues of cooperation and policy harmonization. *Planning Commission* - The **Planning Commission** (now replaced by NITI Aayog) was responsible for formulating five-year plans and allocating resources based on these plans. - Although it played a role in guiding resource allocation, it did not have the constitutional mandate to recommend the **fundamental formula** for sharing financial resources between the center and states, which is the purview of the Finance Commission.

Practice by Chapter

Basic Concepts in Health Economics

Practice Questions

Health Financing Mechanisms

Practice Questions

Cost-Benefit Analysis

Practice Questions

Cost-Effectiveness Analysis

Practice Questions

Health Insurance Systems

Practice Questions

National Health Accounts

Practice Questions

Healthcare Market Analysis

Practice Questions

Economic Evaluation of Health Programs

Practice Questions

Resource Allocation in Healthcare

Practice Questions

Direct and Indirect Health Costs

Practice Questions

Health Budget Planning

Practice Questions

Economic Burden of Disease

Practice Questions

Want unlimited practice?

Get full access to all questions, explanations, and performance tracking.

Start For Free