KRYSTLE HANSEN
BARRY KOTLOVE
ESSAY ASSIGNMENT

ESSAY #1 DOMESTIC MARKET

Health care reform is a political and economic topic that has been debated for years. Most recently in the United States under the president Barack Obama's current term he passed a law that most of us Americans refer to as Obama Care but is also known as the Affordable Care Act. This law requires every American to have some sort of health care coverage. However, is affordable health care really that affordable? There are some countries that have national health insurance systems where government uses tax revenues to provide a basic health care package. However, in America most citizens are enrolled in private health care Insurance usually provided by their employer. Health care provided by employers does come at a cost. It does drive up the cost of labor because it’s another cost incurred by the firm and sometimes the employee. Several companies I have worked for in the past have shared the cost of insurance; by doing this the firm does not incur all the costs of health care; the firm also avoids being fined for not providing health care. If the firm does not provide health care and has more than 50 employees the firm will incur of fine of $5,000. Thus, employers are essentially forced to either incur the costs of health care or pass part or all the costs onto the employee, therefore, decreasing the overall amount the employee actually makes. Some employers could use health care benefits as an enticement to keep their labor force strong. Two of the major economic problems health care creates are cost and access. The affordable care act provides health care to everyone thus, driving the overall cost of care up. The affordable care act increases quantity demanded and therefore increases supply. The market for quality health care only increases as demand increases. If less people demanded health care the supply of health care would natural decrease because there is no longer need for it.
The technological advances in health care also drive up the overall costs and increase supply. In the health care industry you see a lot more elective procedures being performed than 20 years ago. A great number of elective procedures are no longer performed in a hospital but in outpatient procedure clinics thus, allowing for many more of these procedures to be performed. This creates greater demand and allows supply to approach that demand. As cost of health care rises the access to health care decreases. This brings up a good point. Wouldn't the affordable health care act make access easier? It’s not that simple. Since you are allowing affordable health care to everyone you drive up the costs of health care and therefore, are providing less access. With health care costs rising some people are no longer able to afford health care even with insurance. Since the affordable care act when into effect I noticed an increase in my private health care insurance deductible.
A deductible can be a good or bad thing. If your deductible is low you tend to have less out of pocket costs before your insurance starts to really kick in. However, a low deductible isn't cheap, usually when you have a low deductible you have a higher premium. A premium is usually the monthly portion deducted from your paycheck or how much monthly you pay just to be enrolled in the health plan. However, when you have a high deductible you usually have a lower premium. These are costs each employee has to weigh when choosing a health care plan. Most employers have a few different plans or levels of coverage. You have to weigh when you want to incur costs. Do you want to incur monthly costs? Or do you want to incur them every time you see a doctor? If you don't see a doctor often, if you are overall pretty healthy a high deductible would probably be your way to go you would pay less per month. These costs incurred by the worker should be deducted from their labor rate to get their actual labor rate. Your actual labor rate would be your labor rate minus any deductions including: medical, dental, and taxes.
Another cost incurred by the employee is co-payment. A co-payment is a portion of the costs incurred that the patient or employee is responsible for. Most of the time when you visits a doctor's office you must make a co-payment, currently with my private insurance health plan mine is $40.00 and that is a percentage of the overall amount that I will be responsible for. This is the portion that insurance has deemed my responsibility. So even if you do have decent health care coverage you are still responsible for a portion. In other words, you may be responsible for a portion of your premium and a portion that your insurance carrier has deemed appropriate. These costs add up at the end and seem to paint a picture that affordable health care isn’t that affordable.
Another economic problem health care provides is personal bankruptcy. Personal bankruptcies are becoming extremely popular. Just under 1 million personal bankruptcies were filed last year alone in the United States. One of the major reasons people file bankruptcy is medical debt. Usually this medical debt is incurred while a person is not insured. They are usually forced to an emergency room for health care and it is outrageously expensive and since they cannot afford health care coverage they certainly cannot afford the medical bills incurred and then they default on the medical bill. Therefore, they create a situation where they can't escape from the debt and are forced into bankruptcy as a way to alleviate their financial problems. One of the ways employers try to alleviate the financial burden of health insurance for their employees is health savings accounts or sometimes they are referred to as flexible spending accounts. These accounts are a tax free way to set aside money for health related expenses. However, there is a cap in most health savings accounts. For example, my health savings account is capped at $1000 and the money can only be kept in the account for a calendar year. Employers benefit from employees using these health savings accounts because it creates a way for the employee to enroll in health plans without the employer incurring the health care plan costs. It’s a way for the employee to still meet the affordable care act requirements but still does not make health care affordable. Overall affordable health care isn't really that affordable.

ESSAY #2 FOREIGN MARKET Canadian health care, one of the most publicized free markets for health care. However it’s not a good as it sounds. Free socialized health care sounds too good to be true and to a certain extent it is.
One of the major problems facing Canadian health care is rising costs. When you have a government funded program it can be difficult to sustain as population rises. As the median population age rises so the does the chance for chronic disease and therefore, those who have a chronic disease tend to use their health care more often. Between 2000-2010 direct costs for diabetes doubled. This rise in health care costs challenges the government's ability to provide free health care. Demand for health care is also rising in Canada. As population grows it only seems appropriate that demand would also increase. As demand increases it would also seem that supply would have to increase in order to meet the quantity demanded. As demand increases so does costs so it becomes increasingly more difficult for the Canadian government to meet the quantity demanded and also cover costs.
With population increases in Canada you would think the labor force would also increase, however, that isn't exactly true. With the increases in population you also have increase of chronic diseases which either eliminate people from being able to contribute to the labor force or you have people who aren't able to contribute as much as others. With health care not being 100% available to those who demand it, it make its very difficult to have a fully functioning labor force.
In Canada's health care system you don't necessarily have one large health care system that provides free health care for the whole country. Instead you have publicly funded insurance plans providing health care coverage for all legal residents for specified services that they determine are medically necessary. Sometimes you can wait an excruciatingly long time in order to get treatment. In this case the demand for care far exceeds the supply available. There is a huge amount of opportunity cost each citizen is giving up here. Yes, they are gaining free health care coverage but in return they are giving up the ability to seek treatment when they chose and they are giving up their choice and giving it to the government. They are also giving up the freedom to choose their own provider and when they see that provider. A government appointed entity is making those decisions for you. I don't care how free something is, it always comes with strings. The old saying rings true here nothing in this world is free.
According to many Economists health care does not seem to follow typical supply and demand markets. When price is high demand should decrease and when price is low demand should increase, however, that does not seem to apply correctly to health care. Health care to many people could be considered necessity and to others a luxury. If you are healthy young adult health care isn't exactly a priority. For example, for several years before I was employed I went without healthcare because it was not a priority and I didn’t have any money left over to pay for my premiums. But, if you have a chronic illness such as diabetes health care wouldn't be considered a luxury but a necessity. This whole scenario plays into why health care may not follow typical supply and demand markets.
In Canada is pretty apparent that asymmetry of info is present because most of the Canadian System across all the provinces provide the service along with what services should be purchased. This health care system cannot follow typical supply and demand curves when those who are providing care are also making the decision about how to provide care. It seems to me that it is too many hands in the pot. With the rises heath care costs you can't help but wonder when will the costs become too great to sustain such a program. In the 1980's the Canadian system faced a deficit trap and had to react quickly. The first thing they did was reduced the budgets in the hospitals which increased the amount of day surgery being performed but reduced overall occupancy of of hospital beds. The next thing they did in order to cut overall costs was reduced physician fees, by doing this they cut the costs that the health system incurred. However, by reducing the hospital bed occupancy it also created major instability in the nursing employment. By reducing hospital beds they reduced the overall nursing labor force needed for the hospital. By making these cuts they are decreasing their labor force and increasing unemployment. They are just exchanging one set of problems for another. By making these changes they reduced capital expenditures per capita but also reduced the labor force also.
However, Canadians seem devoted to their free health care; you can only wonder how long the government can fully sustain this. If in order to maintain their socialized health care system they have to give up the freedom to see physicians when and where they chose, have to reduce the amount the physicians can charge, have to reduce the amount of patients the hospital may treat, and decrease the overall nursing labor force, is it really that good?

ESSAY #3 FAVORITE CASE STUDY

I chose to write about the case study entitled “Nursing Home Shortage.” This one struck me as pretty interesting because I never really thought about nursing homes having a shortage. I am a healthy 30 year old working, student and mom and it’s not exactly on my radar. However, it does make sense. If you go to school to have some sort of medical training why would you settle for a job that pays pretty low most of the jobs pay under $12.00 an hour. It seems to me if you are professionally trained to take care of another individual you would be worth more than $12.00 per hour. Also, according to the case study being a nursing home worker isn't exactly glamorous it sounds like it’s pretty easy to get injured by angry and unruly elderly people. The case study also stated that sometimes due to a labor shortage nursing home staff are asking to work a double shift, it seems to me that if you are tired and worn out that's when injuries are more likely to happen. Therefore, increasing the labor shortage and requiring more and more individuals in that particular industry to work double shifts sounds like a never ending cycle. With a shortage in the labor force you are forced to either have your current staff work many more hours or hire more people. Hiring more people seems like the automatic solution but since this is a specialized field it may not be so easy to find workers who have the skill set required to the job correctly. Specialization in this particular industry is extremely important. You need to make sure that your labor force in trained in how to deal with the elderly patients correctly and respectively. You see so many times on the new that elder abuse exists in our nursing homes and I think it’s because with nursing home care being such a specialized industry you have a much harder time finding workers and sometimes you might settle for someone who doesn't have the proper training just to fill a need. Demand is only going to increase. With the increases in health care and technology our society people are living longer and since there is a labor shortage the problem is only increasing. At the current rates of demand currently supply is decreasing simply because of lack of labor force. With the current labor rates being so low it’s hard to get new specially trained employees to join the dwindling labor force. In regards to the training the case study points out that its fairly easy to be trained to be a nursing home worker but if the job requires training I would want to be fairly compensated, especially if you are responsible for the training costs out of your pocket. Seems to me the opportunity cost is too great for the future employee to incur to only receive $12.00 an hour in compensation. The opportunity cost incurred by this employee would be to give up a job where they are making money, to pay for training and then in the end only make $12.00 per hour. With the all the negative aspects seems to me that the labor shortage in this industry is completely justified.
This whole case study is centered on the idea that there is a nursing home shortage, but it’s completely logical. You expect someone to pay to be trained just so they can earn a wage that you can't exactly support a family on and a job that isn't exactly glamorous. For example, in 2011 there were 5.3 occupational injuries requiring absences from work, transfers to different jobs, or restrictions on work per 100 workers and this number is also tied with workers who work in the animal slaughtering industry. Nursing home care workers have the same probability of becoming injured on the job as someone who literally kills animals and you wonder why there is a nursing home care worker shortage, it doesn't seem that difficult to me to determine the cause.
The nursing home care shortage is not going to get better anytime soon. According to the case study the American population aged 65 years and older is going to reach 73 million in 2030 and that is up from 40 million in 2010, this means that in 20 years the elderly population is going to nearly double and with an already nursing care shortage it does not look good for the future. This dramatic increase will require 5 million direct care workers in 2020 and that is up 48% from 2010. With the already demanding shortage you can't help but think unless we raise wages and provide a healthier work environment we will pretty much eliminate the nursing home care field all together and then we will be forced to provide for the elderly in an alternative manner.
ESSAY # 4 CRITIQUE CASE STUDY

For my critique I chose the AT&T merger with Direct TV. On the surface this sounds like a pretty good idea. Two larger companies merging to create a giant company that could service more of the population. This large company after the merger would be second only to Comcast and to some we need a giant company to compete with Comcast and decrease the monopoly that Comcast has on the cable market.
In terms of market share with this merger AT&T and Direct TV would have 30 % of the market whereas just Comcast alone would have 22% of the market share, so with the merger Direct/At&t would have the biggest portion of the market. As a consumer, I don't want any one company have the most of the market share I would like to have a perfectly competitive market where you have several options. When you have more companies competing you tend to drive the price down which only benefits the consumers.
The case study also states that the Comcast didn't figure in the decision all. Which I find pretty ridiculous. The agreement came just 3 months after Comcast agreement to buy Time Warner Company. Seems to me that AT & T merged with Direct TV in order to be competitive with Comcast/ Time Warner Corp. It seems to me that you would only ventured out into this market in order to be competitive with Comcast or provide a different set of options for the consumer. It also states in the states in the case study that they will offer a completely new set of options for the consumer. At&t teamed up with Direct TV 70 will now offer nationwide mobile, nationwide video, and 70 million internet customers. Seems to me those options directly compete with Comcast. Direct TV/ AT&T launching their new nationwide video option is an effort to compete with all of the Comcast cable's customers, yet Comcast had no bearing on their decision.
Direct TV has also lately has come under fire in their Latin America regions due to political and economic instability. Of course the CEO has downplayed those threats. With this amount of uncertainty I would not want to go through with a merger of this magnitude.
With respect to supply and demand if you combine this entertainment platform in an effort to be perfectly competitive with Comcast you will most likely have to raise your rates, which in turn will decrease the overall demand. In the entertainment market you have a near monopoly in our area with Comcast you don't exactly have a whole lot of options. There are other companies out there like Frontier in our area, but their serviceability in some areas isn't great. For example, when I lived in Snohomish I could get Comcast or frontier DSL which is about as slow as some dial up so that isn't exactly a viable option in my area. So, with this merger you would think that would give me more options and eliminate Comcast's virtual monopoly but that is not necessarily true. If Frontier doesn't serve my area what makes you think this new merger will?

ESSAY #5 HOW MY OPINION CHANGED?

Before this class economics was a pretty foreign topic. I thought about the talking heads on the television used big words like elasticity, economic growth, foreign and domestic markets a buzz words. They would do this to increase viewership and to make the news sound more exciting. After taking this class I realize that Economics is everywhere, it applies to every facet of life. After reading the chapter about labor force and wage it occurred to me that critics to the minimum wage might be right. A couple of years ago I thought I was all for increasing the minimum wage but only after delving deeper into the issues that are affected by a raise to the state minimum wage that I realized I am personally against it. If the guy working at McDonald is making just as much or more money than me what does that saw about my labor value? I always looked at the labor force directly affected by minimum wage as a starting out job not something that supposed to support an entire family. I currently work above minimum and I struggle to survive on my own, so I know what it is like to not have enough. I am working hard to work, attend school, and still there for my children that I will appreciate a higher wage when I get to that point. I personally now believe that if you raise the minimum wage it will have a huge negative affect on the labor force. However, I know that it’s not that cut and dry. In respect to elasticity I never really thought how market prices were determined. I would just go to the grocery store pick out items I deemed a necessity or want that I could afford and purchased them. However, after digging deeper into price elasticity and how some items are price inelastic meaning they don't change with demand much and how some are very price elastic meaning they are heavily suggestible to demand, definitely changes my perspective as to product price.
Also, I know now that from a strictly economic perspective I don't believe in the affordable care act is really that affordable I think it puts strain on those individuals whom can't afford to be strained. It’s increased my own deductible which has put a financial strain on me. Before this class I didn't realize how supply and demand worked and how the free market isn't always a free as it sounds. This class has increased my awareness of economic situations and I feel better prepared to make more sound economic decisions moving forward.