After the World War II ended, there was a subsequent drop in military spending and many Americans feared that it would bring back the hard times and great depression that they had endured through the war (National Intelligence Council, 2008, 81). Vice versa, the demand for manufactured products fueled an exceptionally strong economic growth after the war ended.
The countries gross domestic product grew from 200,000 dollars to a hefty 500,000 dollars within five years. As a result, the US increased defense mechanisms to a high level and tightened both internal and external security. Indeed, the treasury has pumped more money into the military and internal security organs to safeguard the countrys boarders.
Significance of the economic interchange and dependency
The United States created a system of economic trade interchange and dependency. This system facilitates the free flow of trade and investment across boarders. As a result, there is an integration of the international economy.
The United States had a very good economy at that time, which brought out the fact that great wealth means good security. With the worlds economic financial crisis rapidly unfolding, issues such as foreign aid, protectionism, and scarce resources rank as high as military spending in the United States (National Intelligence Council, 2008, 81).
Effects of dependency on the economic security of USA
Dependence on other countries of the world leads to a chain of deterioration if the economies of other countries suffer. Indeed, this has led policy makers to observe that the economic crisis has replaced terrorism as the primary security concern in the country. This situation is almost similar to a terrorism attack, meaning the security of the United States has been affected greatly by the global economic crisis (Global Strategic Assessment, 2009, 16).
Limitation of funds
The free system of economic interchange and dependency and a limited amount of funds to cover all security systems has caused a wide range of security threats in the country because of free flow of trade. In addition, it has been affected by the free flow of people around the world, which increases terrorism concerns (Steven, 2004, 39). As a developed economy, security issue in the United States as a serious problem. For instance, the department of homeland security was created after the 9/11 bombing in the United States.
Types of security threats
Terrorist attacks
From the 9/11 bombing and other terrorist attacks on the US, terrorists have typically leveraged limited destruction of life and property into massive economic and social costs (National Intelligence Council, 2008, 86). By means of threatening of transport, communication, as well as energy, terrorists have forced the government and the population into costly defensive actions . As a result, customers shied away from the American market, hence stunting growth.
Food insecurity
The economic meltdown has also caused food insecurity among the American citizens. Almost half of all Americans or 45 percent of the United States population earn enough to cover their basic expenses. They live in a state of economic insecurity, and do not earn for living for them to be able to pay for such expenses as food, health care, or housing, etc. Even the minimum wages puts them beyond the federal poverty level estimated at 22,050 dollars (Global Strategic Assessment, 2009, 27).
Conclusion
The global economic crisis has significantly affected the United States security. In this case, security comes in form of food security as well as physical security off its citizens, agencies, and property. This is a contributing factor to the exposure of its security systems to terrorist organizations.
Bibliography
Global Strategic Assessment. Chapter 1, The Global Redistribution of Economic Power. New York: Institute for National Strategic Studies, 2009.
Morgan, Patrick M. International Security: Problems and Solutions. New York: CQ Press, 2008.
National Intelligence Council. 2008. Global Trends 2025: A transformed world . www.dni.gov/nic/NIC_2025_project.html .
Steven, Hook. U.S. Foreign Policy: the paradox of world power. New York: QC Press, 2004.
Couples with infertility often turn towards adoption or the legally ambiguous nature of the black market to acquire a baby to raise. In such cases, they either have to wait during a length adoption process or pay exorbitant fees to a black market broker. However, what if there was an alternative in the form of a baby market? It is the assumption of this paper that a baby market may be a better alternative to the current system that often does not meet demand and contributes to instances of abortion due to the high cost of raising a child.
One of the negative predictions created by the article is the possibility that creating a pricing system for babies could lead to a case of eugenic alteration in the human race. This would be brought about through the economic process of supply and demand wherein baby breeding could become an established practice. Evidence of this possibility can be seen in the initial information provided in the article where demand for Caucasian babies outstrips the current supply so to speak despite the availability of a large amount of African American infants (Landes and Posner 348). Lawmakers can make use of this information by limiting the production of babies only to couples that have been shown to have fertility issues. This helps to potentially remedy the possibility of a particular niche of children being created just for the purpose of fulfilling market demand which could result in a potentially disastrous outcome for the human gene pool.
A positive prediction generated by the article takes the form of the reduction of costs when it comes to acquiring children if legalizing the baby market were to come into effect. The article implies that the current black market costs of buying a child are high due to the illegal nature of the act. The cost of bribes, the potential for blackmail, the medical fees for the mother and other miscellaneous costs drive up the price for babies resulting in exorbitant prices. By legalizing the purchasing of infants, this ensures that the process of supply and demand goes into effect as well as sufficient legal protections for the couple that wants to purchase a child. Lawmakers can make use of this information by enacting laws that specifically prevent the price of baby purchasing from exceeding a certain amount. Not only that, since the process is legalized, lawmakers can also stop instances of blackmail via the implementation of new legislation that enacts protections for the adoptive parents in cases where the mother of the baby is trying to extort money from them. The article states that there is already sufficient precedent for this to be put into effect since adoption agencies do charge fees to their clients in exchange for their services. A more expanded version of this can be put into effect wherein particular children can be purchased through a more streamlined process.
The last prediction made by the article focuses on the social reaction to the creation of the baby market . It implies that there may be significant social resistance from parties who would view the market as being distinctly immoral since it turns children into commodities. Though the article does imply that such a market could be better as compared to the alternative of abortion that is currently in place. It was stated that one of the reasons why women opt for abortion is the financial cost of bringing a child into the world as well as having to care for it. Lawmakers can take this into consideration by applying new laws that help to reduce the risk of children being bought by unfit parents as well as limiting the number of instances that a woman can contribute to the market to limit cases of women getting pregnant simply to sell their baby.
All in all, by having a market available for the child, this would help to reduce the number of cases of abortion.
Works Cited
Landes, Elisabeth M., and Richard A. Posner. The Economics of the Baby Shortage. Legal Studies 323.26 (1978): 347-348. Print.
Apand was a nationwide producer of crisp potato chips and distributed trial potato seeds to Sparnon within the Berri area of South Australia. Sparnon, with his potato farmers neighbours (Perre and other Plaintiffs), boasted of a profitable business of trading potatoes to Western Australia. This was because the price of potatoes in Western Australia was superior to the price in South Australia.
The seeds supplied to Sparnon had been infected with bacterial wilt, therefore, making his potatoes to be infected. As a result, laws in Western Australia banned the importation of infected potatoes as well as the importation of potatoes from farms within a 20-kilometre radius adjoining an infected ranch. Sparnon, alongside other potato growers, were therefore forbidden from selling potatoes to Western Australia for five years (Doyles, 2007).
Perre, with the other potato growers, litigated Apand for the economic loss they had borne owing to the loss of the right of entry to the Western Australian market. Actually, Apand had knowledge of the Western Australian law barring the importation of infected potatoes and the circumstances therein (Doyles, 2007).
Legal Issues
The legal question was if Apand owed a duty of care to Perre along with other potato farmers to evade damage-causing monetary loss to the farmers, despite the fact that there was no related physical damage to property or an individual.
Findings of the case
According to the high court decision, it was established that it was true that Apand owed a duty of care to Perre as well as other potato farmers. The Judges had inconsistent rationale in deciding how a duty of care was enforced on Apand. Nevertheless, everyone settled that Apand ought to have anticipated that bringing infected seeds to a potato cultivator in South Australia would influence the capacity of neighbouring potato farmers to vend potatoes. This would therefore lead to cases of economic loss due to the reduction in sales (Doyles 2007).
Case 2: Caltex Oil (Australia) Pty Ltd v The Dredge Willemstad
Facts of the case
In this case, the defendant (The Dredge) owned a barge, which was being operated in Botany Bay. Because of its negligent steering, it cut off an oil pipeline. The pipelined in question belonged to AOR Company and served to provide oil for a refinery belonging to Caltex Oil Ltd, which is the plaintiff in this case. It should, however, be noted that the pipeline did not belong to Caltex (Gillies 2004). Owing to the severing of the pipeline, Caltex suffered additional costs in transporting the petroleum products to the refinery using other means. This case was concerned with the imposition of the economic loss upon the claimant by a negligent physical act even though the plaintiff did not suffer any damage to hit property (Gillies 2004).
Legal issues
The issue of concern was whether negligent acts and unlike negligent statements could limit the persons or a class of persons to whom a duty of care is due with regard to economic loss (Gillies 2004).
Findings of the case
The reasoning of the judges was varied. Some argued that the negligence for economic loss is recoverable when the defendant had knowledge that the plaintiff specifically may end up suffering economic losses. Another judge argued that recovery could be determined by the adequate closeness between the tortious act and the damage. The last one argued that economic losses emanate from a physical result on the individual or property of the plaintiff. It is not recoverable due to the mere fact that it is an economic loss. All the same, the judges ruled in favour of Caltex Oil Ltd. Despite the fact that the judgments exhibited a degree of variance in expression, the High Court of Australia, later on, indicated that no variations of principles amid affiliates of that court were intentional in so doing (Gillies 2004).
A Comparison of the two cases
The first difference between the two cases is that the case of Caltex involves a physical act of negligence to the plaintiff while the other case of Perre & Ors v Apand Pty Ltd did not involve any physical activity leading to economic losses. In Caltex Oil Pty Ltd v The Dredge, a physical act of negligence brought about economic losses, while in the case of Apand the financial loss was not caused by any physical damage but rather because of negligence on the defendant who acted contrary to particular provisions.
The second difference is that in the case of Perre & Ors v Apand Pty Ltd it was foreseeable on the part of the plaintiff that an economic loss would arise. Apand was very much aware of the laws of Western Australia and could foresee the damage. On the contrary, in the case of Caltex Oil Pty Ltd v The Dredge, the defender did not foresee any economic loss, especially to the third party, in this case, Caltex Oil Ltd.
The third difference in these two cases is that of the impact of the third party. In Caltex Oil Pty Ltd v The Dredge, the pipeline did not belong to Caltex, but The Dredge was answerable to Caltex for negligence. As a result, any economic losses arising in that act of negligence are recoverable. That is, there is the claim of negligence for the economic losses incurred only. It is also clear that duty of care may be claimed where one threatens the economic interest of others. This is the situation in the case of Perre & Ors v Apand Pty Ltd. Interestingly. One is liable for duty of care not only for physical damage but also for pure economic losses. These can be termed as modern developments in the law of torts.
Deterrence can be described as an act of dissuading people from taking part in criminal activity. This is achieved by attaching a respective punishment to a specific criminal behavior. The overall objective of deterrence is not only to punish an individual for their criminal behaviors but also to sway the general public against engaging in criminal behaviors. Deterrence is supposed to encourage people to think twice before they break any law. Therefore, deterrence is meant to ensure that punishments are so harsh that members of the public will fear committing a crime that will lead them to the same punishment. There are several types of deterrence, the key among them being specific deterrence and general deterrence.
Specific Deterrence
Specific deterrence is intended for a specific individual who has been charged with a particular crime. It operates under the pretext that a severe punishment meted out on an offender for his criminal behavior will dissuade him from committing the same crime in the future. For example, in the case of armed robbery, if the offender is sentenced to spend twenty years in jail, he will least likely to engage in armed robbery again after he leaves prison. However, past experiences have indicated that this is not a guarantee especially for first-time offenders (Miceli, 2019). Courts have instead established that the most effective form of specific deterrent is to deliver harsher punishments to individuals convicted of serious crimes for the third time onwards.
General Deterrence
General deterrence is meant for the general public and is intended to discourage them from engaging in the same criminal behavior that an individual has been charged with. Its objective is to teach the members of the public a lesson. The concept is that by punishing an offender harshly, people will be dissuaded from engaging in a similar criminal act. The death penalty is the best example in this category. For instance, if a murder suspect is sentenced to death for the same crime, the general public will be discouraged from committing the same crime as the death row convict.
Is the Concept of Deterrence Working?
Most criminals are more concerned with being caught during or after their commission of a crime than the punishment attached to the crime. Therefore, the chance of getting caught act as a more effective deterrent as compared to harsh punishments. Additionally, sending a criminal to go and send several years behind bars does not deter future crime. It has been established that most prisons indoctrinate and harden inmates with more effective strategies for committing a crime. Indeed, the more time they spend in prison, the more they get used to life in prison (Osborne, 2020). Hence, it does not deter convicts from committing crimes in the future for fear of getting back there.
Moreover, the idea of increasing the punishment severity to deter future crime does not work. This is because most criminals are not even aware of the laws and policies in place to address particular crimes. Instead, prisons maybe centers for exacerbating recidivism among prisoners. Additionally, no proof supports the notion that capital punishment as a form of general deterrence indeed deters crime. No study has been done to prove that death sentence increased or decreases homicide rates in the nation. Therefore, it cannot be concluded without an iota of doubt that the concepts of specific and general deterrence work. Instead of specific and general deterrence ideas, the most effective way to deter crime is to increase the perception of the public that they will be caught and subjected to punishment for their crimes.
References
Miceli, T. J. (2019). The paradox of punishment: Reflections on the economics of criminal justice. Cham: Palgrave Macmillan.
Osborne, P. H. (2020). The law of torts. Toronto, ON: Irwin Law.
Civil rights are the rights of citizens of a country that include basic freedoms guaranteed by the state. One of the first attempts to establish civil Rights on a state level can be traced to Rome. There, inequality persisted as the society was divided into free people and slaves, yet both of the groups had established rights. A series of documents in the 17th and 18th century continuously included fundamental rights to freedom of speech, the ban on slavery, voting rights, equal opportunities, and other rights. These documents and amendments to them gradually expand basic freedoms, pursuing the establishment of equality on a state level.
Although basic civil rights were already established in documents, the quest for equality and justice persisted as not in every country people could exercise those rights. In the 20th century, horrors of the Second World War brought the world to collaborate in this sphere, so several international documents on civil rights emerged in 1948, 1953, and 1966. The public campaigns in the United States and visionary ideas of Martin Luther King brought attention to the black minorities, whose rights were still left unattended. As a result of campaigns and universal attention to it, Civil Rights Act of 1968 was elaborated. It partly addressed the matters of the black population and other minorities, yet the fight for equality continues as factually, there are still incidents of rights violation.
Nonracial Discrimination
Nonracial discrimination regarding civil rights is most commonly associated with employment. The Civil Rights Act of 1964 officially made sexual discrimination illegal. In 1986, the Supreme Court ruled that sexual harassment constitutes discrimination as well in many cases. The EEOC issued binding guidelines on the issue. Meanwhile, legislative attempts to end disability discrimination had been ongoing for more than a century until the Vocational Rehabilitation Act. It explicitly defined disability and established the concept of reasonable accommodation, which was further developed by the American with Disabilities Act (Shafritz, Russell, Borick, & Hyde, 2017).
History of Economic Rights
Before the 19th century, not much attention was paid to defending rights as the productive powers, and the numbers of the workforce were rather slim. Workforce rarely enjoyed sanitary conditions, fair payment, adequate working day, etc. The controversy that was instigated by Beards book on elite and their manipulation of the U.S. economy has brought attention to the economic rights and freedoms in the country. Later, Roosevelt proposed an idea of much spoken about Economic Bill of Rights. It was implemented in 1944 and documented right to work, fair income, housing, health care, education, and other freedoms. Labour unions took over the defence of these rights at the lowest level of authority.
After the Second World War, the efforts of developed countries to establish governmental protection for the rights of labourers and common people continued on a global level. 1945 and 1946 UN Charter and declaration of human rights once again stated the basic rights of people in the economic domain. A broader international document in 1976 once again stated them and proclaimed the need for constant monitoring of the state and realization of these rights. Many states such as Illinois also documented the rights in their governing documents. Overall, presently, there are local, state-wide, national, and international documents that proclaim the rights and those rights can be defended at court if a need arises.
American Welfare System
The welfare system is the multifaceted state mechanism that transfers financial and material aid to those who need it. In the 20th century, social security act established governmental financial support for people of age, mothers with children, and physically handicapped. With time and development of the U.S. as a state with increasing value for social benefits, the amounts of financial help grew, and the target groups broadened. AFDC and the other documents included more and more groups including the elaborated funding pathways and establishing rules for attaining support. Civil rights movement of the 60s contributed to the diversification of the help and raised an issue of black people exclusion from aid programs.
Presently in the U.S., the trend for enlarging support programs for those who require assistance either material or financial is maintained. The broad and complex system of health insurances for eligible groups of the needy population has been established and developed in the U.S. for a long time. Due to that initiative, many people who were uninsured and cannot afford health care services were now able to receive it. SNAP is another mechanism of the welfare system that works towards reducing the needy population. The measures do not address the primary causes of poverty and mainly deal with its consequences (Dorfman, 2016).
Alexander Hamilton is considered as a great man in the history of the United States. This is because his economic polices have influenced the development of the federal government in America for two centuries. Though initially the economic polies that he proposed were not favored by many people, they largely helped in the reconstruction of the economy of the United States. Hamilton was a federalist and his ideas were highly rejected by the republicans. But after the 1812 war, the republicans implemented the economic policies that Hamilton had earlier advocated for (Eugene Wait, 1999). There are various reasons that made the republicans to adopt these economic policies. This paper will therefore discuss why the republicans adopted the neo-Hamilton economic policies.
Discussion
Hamilton economic policies aimed at improving the economy of the United Sates and while at the same time promote the lives of Americans. Some of his economic polies included:
Payment of foreign, domestic and states debts
Taxation
Creation of a bank of the United States.
After the war of 1812 there were various reasons that made the republicans to adopt Hamiltons policies. Some of these reasons include:
The downfall of the Federalist Party
The Federalist Party was against the war with Britain; this created a very sharp disunity between the republicans and the Federalists. As a result the majority of the public saw the federalist as traitors. This lack of support for the party resulted in the downfall of the party. With the downfall of the Federalist Party, the country was now a one party rule (Eugene Wait, 1999). When Jefferson, a republican took office, he was forced to adopt most of the federalist economic policies. Jefferson realized that a loose interpretation of the constitution, as was proposed by the federalist, was at times necessary for the smooth running of a federal government. This realization came when Napoleon offered to sell the Louisiana Territory to the United States. This pushed Jefferson and his party to adopt Hamiltons economic policies including the support of a bank of the United Sates and the payment of national debts (Eugene Wait, 1999).
The Era of good Feeling
This era was a direct result of the downfall of the Federalist Party. During this period there were a lot of good feelings around the country, such as the need for unity, economic growth, compromise and internal improvement. This era was right after the war and the attainment of independence and this somewhat destroyed the partisan strife between the Federalist and the republicans (Eugene Wait, 1999). Thus the Americans were ready to unity and develop their country. This era of good feelings saw the adoption of Hamiltons economic policies, as the republicans saw the need to unite and develop their country.
Economic Growth
After the 1812 war, the republicans realized that without international peace free trade was impossible (Eugene wait, 1999). This encouraged them to adopt Hamiltons economic policies, which promoted taxation and the protection of infant industries in the United States. The tariffs that were introduced helped to raise money for the government.
Conclusion
Hamiltons Economic policies may have some how led to the downfall of his Federalist Party but the adoption of his economic policies by the republicans helped to strengthen the federal government. This is by ensuring that the federal government worked creatively, effectively and positively to help tap the economic energies of the United States. Hamiltons economic policies further encouraged capitalism in America.
References
Eugene, Wait. (1999). America and the war of 1812: The Era of the war of 1812. New York: Nova Publishers.
Currently, the USA is known for having two main political parties: the Republican Party and the Democratic Party. Still, they did not appear simultaneously. In the 19th century, democratic Americans started to emphasize the necessity of slavery abolition. However, they could not come to an agreement considering this point. On the basis of this issue, the Democratic South that was interested in the massive territorial expansion of the country due to economic considerations separated from the North. This paper will discuss these events in detail, emphasizing that the emergence of the Republican Party took place not only because of the conflict between the North and the South considering slavery abolition but due to the combination of different forces that existed in the middle of the 19th century. Social, political, and economic factors will be identified, and two ideologies will be compared.
The conflict between the North and the South started in the 1840s, as a tariff for revenue bill was lowered. Such alteration was advantageous for the South because it had a positive influence on their one-crop economy, but the representatives of the North considered that such change would have a negative influence on the USA manufacturing. Soon, social tensions became even more critical because the question of slavery expansion arose and the views of Northern Democrats and Whigs were opposed to those their southern cohorts had.
During the same decade, the government claimed that it was willing to reach new destinations across the continent. In fact, it even seemed to consider such development to be Americans mission to spread their democratic traditions. The victory over Mexico provided an opportunity to fulfill this goal but also made the conflict between the South and the North even worse. It turned into the major political issue of that time because of Mexican-American and the desire to make California a part of the Union (even though they already had good commercial relations) made the government question the possibility of making the states free.
A part of the countrys population also believed that the expansion of slavery to new territories along with democratic ideas could have advantageous influences on the economy, while others saw it as the main threat. As a result, a lot of political debates emerged. Some decisions regarding them were even discussed by the court.
Still, the creation of the Republican Party was not triggered only by these issues. In addition to them, the market revolution also fuelled the process. The North received an opportunity to unify because new railroads that connected its eastern and western parts started operating>. Those people who followed the ideas of Republicans received a chance to gather and develop their political interventions.
Increased immigration to the country was considered as a negative experience that prevents America from developing by some populations. Those people who revealed a strong sense of nativism created the Know-Nothing Party. Its views did not coincide with those the Democratic Party had, which led to conflicts. It would emphasize the necessity to have only native-born American politicians in the government. As this party fell apart, its disappointed representatives joined the Republicans.
The development of free labor ideology also turned out to be rather a beneficial alteration for the creation of a new party. It underlined Americans desire to abolish slavery. A part of the population supported this belief because the connection between the image of the country and free labor was established. Frederic Douglas wanted to avoid misunderstandings and tried to allow the states make a personal decision regarding this question. Such intervention led to Bleeding Kansas and turned out to be advantageous for Republicans, as Missourians would come to Kansas to vote for slavery.
Of course, the American presidents were also involved in this process. Douglas, who expected to be reelected, suddenly faced strong opposition from Lincoln while campaigning for a place in the Illinois senate. Lincoln underlined moral fervor of the issue and resorted to the Constitution to support his views, which had the positive influence on the peoples perceptions. Even though Douglas with his value of self-government and self-determination was reelected, Republicans obtained their auditorty. Finally, with the election of Lincoln as a President determined the road to secession, as the South would believe that its interests were not supported and its rights were not recognized.
All in all, it can be stated that Democrats wanted the government to let the states be free, while Republicans wanted to be supported. The Democratic Party paid more attention to agriculture, while the Republican one focused on manufacturing. Democrats were against slavery abolition, but Republicans were for it.
Thus, it can be concluded that the Republican Party emerged due to the development of different views considering slavery. It gathered the representatives of other political parties that fell apart at that time and turned into one of the leading parties in the country just in two years. The party believed that slavery should not spread to new territories even though it was not concerned about its total abolition. They thought that new territories could turn into the land of second chances for poor people.
Bibliography
Bates, Christopher. The Early Republic and Antebellum America. New York: Routledge, 2013.
Broadwater, Robert. Did Lincoln and the Republican Party Create the Civil War? Jefferson: McFarland, 2008.
Carnes, Mark. Historical Atlas of the United States. New York: Routledge, 2013.
Eual, Yonatan. The Young America Movement and the Transformation of the Democratic Party. New York: Cambridge University Press, 2007.
Foner, Eric. Give Me Liberty! An American History. New York: W. W. Norton & Company, 2013.
Guelzo, Allen. Lincoln and Douglas: The Debates that Defined America. New York: Simon and Schuster, 2010.
Paley, Carl. The Late, Not So Great, Republican Party. Pennsauken: BookBaby, 2014.
Wroe, Andrew. The Republican Party and Immigration Politics. New York: Springer, 2008.
Lanis Hicks is the author of Economics of Health and Medical Care, the book about economics, various economic tools and methods that can be used in health care, and health policies that have to be taken into consideration. The book is divided into several parts with a number of chapters in each section. In this project, Chapter 14, titled Financing Health Care will be summarized and analyzed. At the beginning of the chapter, there are six main objectives set.
One of the tasks the author of the chapter offers is the identification and description of basic insurance terminology. In other words, it is necessary to clarify the main terms in order to use them properly. In health care, there are three main methods of financing that are out-of-pocket payments by consumers, insurance premiums, and taxation (Hicks 385). Each method has its own characteristics, types, impacts on different groups of people, and various costs. It is not enough to know the existence of such methods. It is more important to comprehend how to use the offered methods and what benefits or challenges to expect.
Importance of Financing Characteristics
The main characteristics of financing health care methods vary considerably including the sources of payment, the reasons for payment, etc. For example, such financing category as consumers out-of-pocket payments may contain plenty of techniques and approaches such as deductibles that may influence certain administrative costs, copayments that are applicable when certain health care services have fixed prices, and coinsurance that is used to pay the difference, full consumer payments, etc.
The impact of each financing method varies because of the different characteristics of people, who are involved in financing operations. Much attention is paid to income levels or family sizes. It is important to evaluate patients abilities to pay for health care services and establish the most appropriate for their opportunities. For example, taxes depend on peoples incomes and the choice of products.
People with different incomes cannot allow themselves to have the same level of taxes. Besides, people can analyze their working conditions to make sure who should pay for health care services. In some situations, the same financing methods may be paid in a variety of ways. For example, it is possible that patients themselves or their organizations could pay a patients insurance premiums any time they find it necessary. Hicks also underlines that some financing methods may be interrelated. So that insurance premiums may be partially excluded from taxation (Hicks 385).
Key Terms of the Chapter under Analysis
In this chapter, the author focuses on the terms that have to be properly understood by the reader. There are many insurance concepts that should be clarified before the evaluation of health care financing and health care costs occurs. The description of each term has its reason and an overall impact on the financing process. The following definitions are given:
A deductible
Is a fixed amount that should be paid by a person before a company starts paying for their health care services. It helps to eliminate the processing of claims that could be in a form of small amounts or significant amounts. If the deductible is high, it is possible to expect a few claims. Besides, the deductible is a great burden for people with low incomes because it turns out to be a huge percentage of total income (Hicks 386).
A copayment
Is a significant part of an insurance policy that represents a large portion of income. When a person visits a doctor, needs some prescription drugs, or asks for primary care, they have to consider this amount in addition to the payment offered by the insurer.
Coinsurance
Is the percentage of costs that is spent on medical services by the beneficiary and paid by the insurer as a kind of balance between what is spent by the patient and required by an organization. It helps to lower the price of the covered medical services in regard to the sum paid by the insurance company.
Stop-loss
Is a type of insurance that protects people against various unpredictable losses and reduces the possible risks connected with catastrophes that cannot be controlled or predicted by people.
Community rating
Is the method that covers all taxpayers and identifies the same payments for all people regardless of their family size, incomes, and the number of their addresses to hospitals and requests for health care. It means that there is a group of people, who use health care services frequently, and there is a group of people, who use the same services rarely. Still, both groups pay the same amount of money, and the first group of people gets more benefits in comparison to the second group of people.
Experience rating
Is the opposite of the community rating method. There are people, who have already used health care services and paid for them, and people, who use such insurance the first time. The result is the possibility to get different rates that depend on their experiences with the usage of medical services. This method helps to define low-risk groups of users so that they can pay low insurance amounts.
Financing Health Care in the United States
As soon as general terms are identified, and clear explanations are given, the author focuses on the health care of the United States, describes the mechanisms used by different insurance companies, and uses statistics to prove that the chosen topic is burning and interesting for discussions. For example, it is concluded that, in 2010, more than $2,500 trillion was spent on health care in the United States with about $300,0 billion financed by out-of-pocket payments by consumers (Hicks 388).
Besides, certain comparisons were given to explain how the American health care insurance system has been developed with time. For example, in 1965, only 24% of private health insurance occurred. In 2010, the percentage was about 33%. Employment-based insurance remains to be the main coverage for the majority of people. The author introduces the table with clearly identified sections and numbers to demonstrate the changes between 1965 and 2010.
A number of premiums are usually paid by employers. Such a decision is made to gain the required workplace benefits and to cover the changes connected with income taxes. Employees have to spend small amounts of money and, as a result, bear a certain share of such premium costs because of low direct wages (Hicks 388). Taxation is defined as one of the frequently used finance methods based on the Medicare program. Certain individuals, employees, and organizations pay different taxes in regard to their wages and experience. In America, $1.35 trillion of total health care financing was based on taxation.
Sources of Health Care Services Funding
In fact, the sources of health care services funding vary considerably and have been enlarged with time. In addition to the already mentioned funds such as out-of-pocket methods and private health insurance, there are such public funds as Medicare and Medicaid. There were absent in 1965. Still, nowadays, more than 20% (Medicare) and 10% (Medicaid) of health care insurance come from these organizations.
There is also a small portion of people, who rely on such funds as Veteran Affairs, General Assistance, Department of Defense, etc. Still, each financing method has its burdens that may be imposed on different groups of people. Therefore, the author suggests examining and analyzing various situations to comprehend the benefits and shortages of different financing methods in health care.
Alternative Payment Methods and Sources
In the chapter, the author also discusses several additional payment methods such as insurance premiums and taxation that are available to people and their impact on employees and companies owners. Insurance is available to people in two forms: first, they can purchase them independently, and second, they can get it through the workplace. It can be paid by employees, employers, and the combination of both. The system of insurance premiums is not complicated.
If employees are worth a certain amount of money, employers will be ready to pay the same amount of compensation that can be in a form of salaries or special benefits. In case the increase in benefits is observed, the employer has the right to reduce salary. In such a situation, the economic burden will fall on the employee directly or indirectly (Hicks 391). There are also mandated insurance benefits that can be used by individuals to cover their treatment using special laws and legal explanations of the possibilities of having free treatment.
Taxation is another alternative method of health care public funding. Taxes are usually regarded as income reductions without any benefits. Though some benefits could be observed in this financing method, they can hardly be observed directly and at the moment of payment or using services. As a rule, taxation could be direct (levied on income and cannot be shifted) and indirect (can be shifted). Payroll taxes and sales taxes as the main types of taxes that people should be aware of.
Payroll taxes are usually levied on wages that used to finance hospitals. A worker pays it. The peculiar feature of this tax is that it is equal for all people, who work. Sales taxes are levied on services or products that are offered to people (Hicks 397). They are defined as the main sources of revenue. There are three types of sales taxes: general, modified general, and specific. Taxes can also be regressive (low-income individuals are less dependent on their incomes in comparison to high-income individuals) and progressive (high-income individuals are less dependent on their incomes in comparison to low-income individuals). There are also neutral taxes when the same relative impact on all income cohorts (Hicks 399).
In general, in this chapter, Hicks explains that people should have enough amount of information in order to make the right choices and consider personal incomes to make reasonable payments. The evaluation of the financing system in the United States is an attempt to understand that the benefits of financing practices actually cover all costs and challenges of the process.
Works Cited
Hicks, Lanis. Economics of Health and Medical Care. Burlington: Jones & Bartlett Publishers, 2012. Print.
Private health insurance industries play essential role in the healthcare system of America. Reflectively, one dollar out of every three dollars spent in 2011 on healthcare was paid to private insurers (Davies and Crombie 22). The Standard Industrial Classification (SIC) was created to establish a standardized system of classification for business organizations to aid in the comparison of statistical data used in describing various aspects of the United States economy.
Reflectively, the main objective of health economics is to promote better understanding of economic aspects of health care problems so that corrective health policies can be designed. Therefore, it is important to analyze fixed and variable costs in private health care insurance industry and how these determinants interact with demand in the market.
Among the general strategies adopted by players in this industry include developments of an inclusive stakeholder strategy, designing of competitive insurance packages, and diversification in terms of designing tailored products. This reflective treatise attempts to explicitly reflect on the Porters model founded on the premises that corporate plans should meet the opportunities and pressure in the organizations outside setting.
Among the discussed factors include threat of entry of new competitors, the bargaining power of buyers, and suppliers bargaining power. In addition, the influence of substitute products and stiff competition between industries are analysed in terms of how they affects profit margins. Specifically, the focus is on management strategies to counter competition as applied by the Grand Valley Health Plan (HMO) Michigan.
Health Economics-SIC and NAICS
Introduction
Private health insurance industries play essential role healthcare system in the U.S. today. Davies and Crombie note that one dollar out of every three dollars spent in 2008 on healthcare was paid to private insurers (Davies and Crombie 22). Moreover, several public insurance plans now rely on services of private insurers to help manage a significant share of spending (Davies and Crombie 32).
In spite of this important role, the private health insurance segment has gained relatively modest attention from researchers, mainly because of limited availability of data on insurance contracts. By studying health economics, Neun and Santerre argue that Health economics encompasses a broad range of theories, concepts, and topics thus it is difficult to precisely define (4).
Davies and Crombie define health economics as study of supply and demand of health care resources among a population (Davies and Crombie 12). They note that the study of health economics encompasses the application of a range of micro-economic tools which include demand, to health concerns and problems (Davies and Crombie 32).
Description
The key objective of health economics is to promote the better understanding of economic aspects of health care problems so that corrective health policies can be designed. To be able to tackle the problems mentioned Office of Management and Budget (OMB) in collaboration with other agencies created the North American Industry Classification System (NAICS), a classification system that substituted the Standard Industrial Classification (SIC) system.
Since 1993 efforts have been made to enable the transition from NAICS to SIC, and in 2001 NAICS was formally adopted. These efforts have materialised into reliable and relevant classification systems within the periphery of private health care insurance industry. The NAICS, OMB, and SIC are associated with progress in the development of health economics solutions through insurance premiums. Besides, these agencies are associated with the review of health policies across the United States of America.
History
Standard Industrial Classification (SIC) was established in 1938, and since then has been recently revised. The Standard Industrial Classification (SIC) was created to establish a standardized system of classification for business organizations, and in so doing to aid in the comparison of statistical data used in describing various aspects of the United States economy.
After a series of revisions to SIC, the Office of Management and Budget (OMB) in 1997 approved the adoption of North American Industry Classification System (NAICS) to substitute the Standard Industrial Classification (SIC) in the collection of industry statistics.
As a replacement to the Standard Industrial Classification (SIC), North American Industry Classification System (NAICS) were established in 1997. Like SIC the NAICS has been revised and updated. For example, a result of the North American Free Trade Agreement (NAFTA) the NAICS codes have been revised in 2002 and 2007, and NAICS now apply to Mexico, Canada, and the United States.
Experts argue that rationale for introducing NAICS codes to replace the SIC was to permit the inclusion of industry ratios and averages that could be compared between the three countries, and to incorporate newer industries not covered in the SIC codes, like, high tech industries, biotechnology, and services industries (Tolley 33).
Organization
NAICS and SIC and industry categories cannot be compared directly because the NAICS codes change has split some SIC categories. Previously, under the SIC groupings; there was no distinction of corporate headquarters from the service or product they produced. However, under NAICS codes there is the recognition of corporate headquarters in the Management Sector.
Manufacturing, for example, has been is reorganized to include high-technology industries. Moreover, NIACS offers a more detailed account on a company including an additional breakdown of services sector in SIC system into nine new sectors.
Government policies
Office of Management and Budget established the Economic Classification Policy Committee in 1992 to pursue a fresh slate examination of economic classifications for statistical purposes1. Since 1939 the U.S. has been using the Standard Industrial Classification (SIC) system.
While SIC had undergone periodic revisions, the last one in 1987, rapid changes in the U.S. and world economies brought SIC under increased scrutiny. In response to the need for a classification system that better reflected the dynamic nature of economies, OMB established the Economic Classification Policy Committee 2. Government agencies from the United States, Mexico and Canada3 were tasked with the development of a system that accounted for rapid changes in the U.S and world economies.
Industry Demands: Determinants of existing firms
Fixed costs
Irrespective of the dynamics in the private health insurance industry, fixed costs does not change over time. For instance, utility costs are characterised as fixed cost since the accrued value remains constant irrespective of any change in other cost in private health insurance industry. However, an upsurge in business utilities may transform the same to variable cost in that it may determine profit levels.
This is minimal and has no substantial contribution towards influencing the industry demands. For instance cost of maintaining the insurance firm in terms of bills and rent may not change and has no impact on performance of the firm. Thus, fixed costs are assumed to be constant, are experienced internally, and often budgeted for as component of daily operation.
Variable costs
Variable costs are very responsive to swings in business environment in health insurance industry. As a matter of fact, since these costs are not constant, a firm is likely to experience impact of change in business environment. For instance, when the business volume increases, variable costs also increase.
On the other hand, when business volume decreases, variable cost will respond in the same way and decrease proportionally. Variable costs have direct influence on private health insurance industry demands. Variable costs are also called the deductable and influence the choice between partial and complete coverage as controlled by expected gains on utility.
For instance, an increase in the premium rates may negatively affect demand for private health care insurance since some customer may shy away from one insurance firm in favour of another. In the event of this scenario, demand will decrease. Examples of variable costs in private health insurance industry include expansionary cost, cost of preferring one product over another, and inventory.
Current changes
In the last decade, private health insurance industry has undergone series of changes in line with the American health care reforms agenda. Under the new arrangement, the private health care insurance industry must seek approval from the government and justify charges before clearance (Neun and Santerre 122).
As the cost of living increases, insurance industries offering private health cover have been forced to reduce their premium and embrace bottle neck competition from the government sponsored insurance cover for the citizens of America. In response, most of private healthcare insurance industries have opted for product tailoring and customisation as a remedy for survival. Unlike before, this industry now offers packages such as compensation against incurable diseases such as HIV/AIDS, cancer, and other viral infection to their clients.
Shape of curves
Average cost curve.
The above curve represents the relationship between price and quantity demanded in the long run. The as price for a product decreases, the quantity offered will also decrease. In the long run, an increase in price will respond positively with an increase in quantity of packages offered by private health insurance companies.
Marginal cost curve.
Key:
AFC Average Fixed Cost
AVC Average Variable Cost
MC Marginal Cost
ATC Average Total Cost
Among the components of marginal cost curve include the short run and long run curves which directly influence productivity and performance at ceteris peribus. As indicated in the above curve, production inputs changes up to a point of diminishing returns. At this point, market is exhausted. Further introduction of more products will not change returns. This means that economies and diseconomies of scale are exhausted. In relation to private health care insurgency industry, economies of scale margin are noted in the declining long-run average total cost curve. On the other hand, diseconomies of scale trigger the long-run average total cost curve to rise.
Analysis of Competitive Forces as applied in the Grand Valley Health Plan (HMO) Michigan
In 1980, Michael Porter in his book, Competitive Strategy: Techniques for Analyzing Industries and Competitor, identified a five competitive forces model for strategic analysis of an organizations industry structure and processes. Porters model is the founded on the premises that corporate plans should meet the opportunities and pressure in the organizations outside setting. In particularly, competitive strategy should understand the organization structures and their dynamism.
These forces according to Porter show the levels intense competition between industries and therefore, determine the productivity and charm of an industry. As a result, the corporate objective should be to adjust the driving forces in such a way that they improve the situation of the organization same as in the case of HMO which opted for diversification, introduction of competitive price mechanism, streamlining operations, and managing inventory.
Threat of entry of new competitors
Porter argues that competition, especially when stiff, is directly related to performance of a product or service in the demand market. When such phenomena occur, the new entrants have the capability to change key market determinants such as market prices, market share and customer loyalty.
Moreover, the threat caused by new entrants is subject to the barriers to entry in the business. For example, the insurance industry in the U.S. have laid down requirements for any company that intends to run an insurance firm; there is a minimum amount of money that must be deposited in the central bank.
For example, all states require insurers to be financially solvent and capable of paying claims. States also require prompt payment of claims and other fair claims handling practices. These high initial capital requirements have inhibited the numbers of new entries recorded over the decades as HMO remains established and profitable (Neun and Santerre 178).
Intensity of rivalry
Intensity of rivalry is applied by Porter to describe the levels of competition amongst existing industry players. Economically, whenever there is competition between industries pressure is often than not directed in to prices of goods and services. Thus, stiff competition between industries affects profit margins for every single company in that industry.
Porter states that competition between industries is greater when the existing industries have same strategies, there is less product diversification and when the industries are almost the same size. In the US on the contrary, apart from product differentiation by the private insurance companies have, the companies operate at very different levels in terms of economy of scales (Normand and McPake 78).
Competition generally determines the profit margin. Therefore, established companies may be in a better position to compete those weak firms. As a result, this aspect has a very strong influence on survival and performance of firms in this industry such as HMO since it has integrated the ability to survive and thrive amidst competition through tailoring of its family health insurance package.
Pressure from substitute products
Substitute products cause threats in an industry when alternative goods and services are available in the market and offer better prices and performance. Such substitute products are likely to capture a large portion of the market thus reducing the sales volume of each existing industry. The US private insurers provide a variety of insurance policies that suits an individuals income and needs.
As a matter of fact, these substitutes are spread across the market and may not necessarily satisfy demands of different customer. Though the number of substitutes may be substantial, many players may want to incorporate them in the bracket. Thus, volume of sales realised will be relatively lower as these players outdo one another through modification. However, HMOs products are unique products that fit different classes of clients from high end to low end income brackets.
Bargaining power of buyers
In addition, the bargaining power of buyers determines how much buyers can enforce pressure on market margins and volumes. The bargaining power of buyers of policies is high when the industry comprises great numbers of small and medium term operators and when buyers purchase large in volumes.
Most policy buyers in health insurance have the opportunity to buy policies from numerous insurance firms that increasing their bargaining power. However, if with this bargaining power, there are federal laws that guide the insurance industry on the amount of premiums to charge (Neun and Santerre 158). These federal laws control and regulate the types of premium which makes it into the market.
On the measurement scale, this aspect can be classified as having a strong influence since bargaining power of the buyer influence quantity of sales and overall returns. Behaviour of utilities is determined by the responsiveness of buyers and their purchasing power to purchase services offered by private healthcare insurance companies. In the last decade, HMO has managed to maintain position four due to its integrated pricing model that is friendly to clients.
Bargaining power of suppliers
Finally, Porter coined the concept of suppliers bargaining power to denote the ability of all those involved in the provision that particular service to influence the terms and conditions of policies in their favour. The private insurance companies without government regulations would want to sell their policies at the maximum possible prices (Davies and Crombie 43).
However, government regulation controls their activities and evaluates their policy before introduction into the market. Thus, government control, through regulatory authority, often influences overall impact of policies floated by players in this industry. As a matter of fact, this aspect has moderate effect on demand in HMO which often uses in house supply chains and outsources the most cost effective suppliers such as the Virginia Medicare.
Conclusion
Conclusively, competition is a major factor that influences operation and organization of private health care insurance industry. As a matter of fact, the aspect of historical review displays series of changes that has gripped this industry and threat of high living standards making some of their client opt for public healthcare insurance.
Fixed and variable costs in private health care are determinants of demand in the market. Variable costs change as the demand in the market change. However, fixed costs are assumed to remain constant irrespective of market swings since they are covered in the budget and are predictable.
Threat of entry of new competitors contributed minimal challenge to player in this industry as compared to the bargaining power of buyers which determines how much buyers can enforce pressure on market margins and volumes. Besides, suppliers bargaining power denotes the ability of all those involved in the provision that particular service to influence the terms and conditions of policies in their favour. This aspect presents a moderate challenge to player in this industry since they are easily replicable.
Substitute products cause threats in an industry when alternative goods and services are available in the market and offer better prices and performance. Generally, stiff competition between industries affects profit margins for every single company in this industry. Reflectively, the above aspects control survival and profitability of firms in this industry since they influence positioning and maintaining a market niche.
Works Cited
Davies, How, and Crombie Ian. What are confidence intervals and p-values? London: Hayward Medical Communications, 2009. Print.
Neun, Stephen, and Santerre Rexford. Health Economics: Theories, Insights, and Industry Studies. 5th ed. 2009. Alabama: Cengage Learning. Print.
Normand, Charles, and McPake Barbara. Health economics: an international. 2nd ed. 2008. New York: Taylor & Francis. Print.
Tolley Keith. What are health utilities? London: Hayward Medical Communications 2009. Print.
Advocacy for the development of affordable medical cover is fundamental in the advancement of the populations health. Populations especially those, who hail from underprivileged and middle incomes, choose a medical cover using economic factors like opportunity cost and willingness to purchase. By advocating for the creation of the affordable medical cover, there has been a rise in the number of people from less privileged communities, who have purchased and consumed a wide range of medical services provided by the state.
A good and affordable medical cover is fundamental in the overall health of citizens living in a particular country. Advocacy for affordable medical cover is the health care decision that I made. The healthcare decision transpired because several individuals in less privileged regions of the world suffer from expensive medical services (Ballentine, 2011). Over time, I have witnessed individuals, who suffer from ailments but instead of visiting medical centers for treatment, opt for OTCs over-the-counter medication from chemists. Getzen (2013) highlights that there are numerous cases of people, who develop complications after consuming OTCs. From the observation, I decided to advocate for the creation of a medical cover that is affordable to the less privileged communities.
Opportunity cost and willingness to purchase comprise the two economic factors or economic principles that influenced my decision to advocate for affordable medical cover. In my observation, I realized that several people, who hail from underprivileged communities, could not afford the various medical covers that the health care sector provides. McCaughey and Bruning (2010) explain that while the cover provided by the health sector may look like it is affordable, people from underprivileged communities forego the cover, and purchase services deemed to be more important. As such, they are unwilling to purchase and consume the services envisaged by the medical cover. For instance, in several parts of the United States, underprivileged communities use their little income to purchase food, clothing, and shelter and forego the medical cover provided by the state (Brannon, & Feist, 2010). The situation compounds because a large number of people in less fortunate communities are not in formal employment that provides a medical cover.
One way that my health care decision has had an impact on the public health is the increased scale of initiatives that champion for creation of affordable medical cover. The impact on public health is a rise in the number of people, who have purchased and utilized the affordable medical cover provided by the state. Although the increase is not at its optimum level, it is encouraging. Therefore, increased numbers of people, who are purchasing medical cover, comprise some of the impacts associated with my healthcare decision. Increased initiatives that focus on development of an affordable medical cover is also among the benefits that my health care decision has accrued to the public health sector.
My health care decision to advocate for affordable health care that is within the reach of middle-income earners and less privileged in the community is one that has been fruitful. The fact that an increasing number of people are starting to purchase the medical cover is one of the impacts that the healthcare decision has accrued in the sector of public health. It is notable to assert that although the range of medical cover present is encouraging, the health care sector needs to do more in order to advance the overall health of the population.
References
Ballentine, J. (2011). Your Right to Make Healthcare Decisions. Colorado: Colorado Hospital Association.
Brannon, L., & Feist, J. (2010). Health Psychology: An Introduction to Behavior and Health. Sydney: Cengage Learning.
Getzen, T. (2013). Health Economics and Financing. Hoboken: John Wiley & Sons.
McCaughey, D., & Bruning, N. (2010). Rationality Vs Reality: The Challenge of Evidence-Based Decision Making for Health Policy. Implementation Science, 5(39), 1-13.