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20 Cards in this Set
- Front
- Back
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Actuarially Fair Premium
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A health insurance premium that just covers the expected cost of enrollees. Is equal to the expected payout.
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Adjusted Gross Income
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A household's total income minus adjustments.
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Adverse Selection
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When people have accurate inside information about their health prospects, it results in a bias in the mix of people who decide to buy insurance. When insurance costs rise, only those who know they will get sick will buy. Keeps occurring.
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Alternative Minimum Tax
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A tax that replaces the regular income tax for a group of high-income households. Intent is to make every high-income household pay at least a minimum amount of tax even if they would not owe any.
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Annuity
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A payment made monthly for as long as the retiree lives.
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Average tax rate
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The ratio of total taxes paid to total income earned. Lump-sum tax has high ATR, low MTR, and no efficiency loss. Not used in U.S.
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Catastrophic Insurance
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A type of health insurance where the insurance company will pay the entire medical bill above a high threshold. Person pays below treshold.
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Coinsurance Rate
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The percentage of a medical bill that the patient is required to pay. Also called the cost-sharing rate.
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Comprehensive Income
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A household's consumption plus its increase in wealth (saving). Equal to the maximum the household could consume in a given year while holding its wealth constant.
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Deadweight loss
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Same as efficiency loss. Reduction in society's welfare caused by the change in the mix of goods when allocative efficiency does not hold. For tax, it is equal to 1/2 t^2 E P Q
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Deductible
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Under health insurance, the first dollars of a person's annual medical bill which the patient is responsible for paying.
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Efficiency Loss
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The reduction in society's welfare caused by the unfavorable change in the mix of goods in response to a tax or subsidy when there is no externality. 1/2 t^2 E P Q.
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Itemized deductions
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Income tax deductions for certain kinds of expenses, subtracted from adjusted gross income.
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Lump-sum tax
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A tax where the amount owed doesn't vary with the taxpayer's behavior. No efficiency loss from it.
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Marginal tax rate
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The ratio of the additional tax to additional income. Used in U.S.
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Moral Hazard
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The use of more medical care by insured people because they know that their insurer will pay part or all of the bill.
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Pay-as-you-go
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Using current payroll taxes to pay current retirees' benefits.
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Progressive Income Tax
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An income tax where the ratio of tax to income rises as income rises.
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Social security program
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A gov't program in which workers and employers pay payroll taxes each year to finance benefits to current retirees based on their wage histories.
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Tax
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A compulsory payment levied by the gov't.
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