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Assume that Country A has a population of 500,000 and only produces one good—cars Answer

Assume that Country A has a population of 500,000 and only produces one good—cars. Country A produces 100,000 cars per year. The people in Country A purchase 90,000 cars, but there are not enough cars to fulfill all the demand. They decide to import 50,000 more. The government buys 25,000 cars for its police force, and 10,000 cars are bought by companies to transport employees to other locations to work. They also export 65,000 cars to nearby countries for sale.

What is Country A’s GDP?

What is the composition of GDP by percentage?

What is the GDP per capita?

How does this relate to Keynesian economics?

Part II Go to the Bureau of Economic Analysis on the Department of Commerce’s Web site, and look up the latest new release for real GDP. Address the following questions after reading the latest release:

Where are we in the business cycle?

What is the real GDP today?

What is the largest component of GDP?

What is the smallest component of GDP?

What is the fastest growing component of GDP and why?

What components of GDP were involved in the change from last month to this month?

What is the price index today?

What caused the change?

 

 

Part-I

Given:

Population = 500,000

Consumption C = 90,000 cars

Import = 50,000

Government expenditure G = 25,000 cars

Business Investment I = 10,000 cars

Export = 65,000 cars

 What is Country A’s GDP?

GDP is calculated as:

GDP = C+I+G+Net Export

GDP = C+I+G+(Export – Import)

= 90,000+10,000+25,000+(65,000-50,000) = 140,000 cars

What is the composition of GDP by percentage?

Percentage of consumption = C/GDP = 90,000/140,000 = 64.29%

Percentage of business investment = I/GDP = 7.14%

Percentage of Government expenditure = G/GDP = 17.85%

Percentage of net export = (Export-Import)/GDP = 10.71%

What is the GDP per capita?

GDP Per capita = GDP/Population = 140,000/500,000 = 0.28 cars

If government purchases go up in the short run, what happens to GDP?

Government Purchase (G) is an important component of GDP. When G goes up, GDP also increases. But, in short run increase in government spending may not have significant impact on GDP as supply may not increase to meet increased government purchases. To meet the increased demand from government, country will have to import. Thus, positive impact of increase in government purchase would be partially negated by increase in import (as increase in import reduces net export). But in long term, domestic supply will increase to meet increased demand from government. This will reduce import and increase GDP significantly.

If consumption and government purchases go up, what happens to GDP in the long run? Why?

Increase in consumption (C ) and government purchases (G) increases GDP in long run. To meet the increased demand from consumers and government, production is increased. Increase in production increases business investment (I). The increase in production also increases employment opportunities and hence disposable income in the hands of consumers increases. The consumers spend a part of the increased income on consumption (which is determined by MPC), and hence consumption further increases. In long run, the GDP will increase significantly.

Part-II

Where are we in the business cycle?

A business cycle is defined as a process by which the economy grows, contracts, and recovers over time. An economy goes through all these phases and process repeats itself. An economy grows in expansion phase and reaches peak. After that it begins to contract and reaches trough, and then again recovers and starts growing.

Presently we are in recovery phase of business cycle. After financial crisis of 2008 and recent debt crisis in Eurozone, economy is recovering. Demand has started to rise, production has increased, unemployment level has come down. Businesses have become optimistic and started investing. Consumer confidence level has gone up. . Real GDP has increased by 2.5 percent in the second quarter of 2013. The price index also rose by 0.9% in second quarter quarter. Real personal consumption expenditure increased by 2.7% during second quarter. (BEA, 2013) Thus, we are in recovery phase of business cycle.

 

What is the real GDP today?

The real GDP of USA is $13.75 trillion.

What is the largest component of GDP?

The largest component of GDP is personal consumption ($9.75 trillion)

What is the smallest component of GDP?

The smallest component of GDP is Net Export. Net export of USA is negative.

What is the fastest growing component of GDP and why?

The fastest growing component of GDP is Gross private domestic investment. In recovery phase, businesses become optimistic and invest more. The government policies are also supportive,. So, business investment grows at high rate. .

What components of GDP were involved in the change from last month to this month?

The main contributors in change in GDP from last month to this month are personal consumption expenditure, and Gross private domestic investment.

What is the price index today?

Price index today: 116.416

What caused the change?

Personal consumption expenditures (2.4%), Gross private domestic investment (1.16%), Net export (-0.21%), Import (1.9%), Government consumption and gross investment (-0.97%)

 

 

References

BEA. (2013). National Income and Product Accounts; Gross Domestic Product, 1st quarter 2013 (second estimate);Corporate Profits, 1st quarter 2013 (preliminary estimate). Retrieved From: http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

 

BEA(2013). National Data. Retrieved From: http://www.bea.gov/scb/pdf/2013/06%20June/D%20Pages/0613dpg_a.pdf

 

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The Narrative of the Life of Frederick Douglass: An American Slave was written in first person, while the Narrative of Sojourner Truth was in third person Answer

During the mid 1800s, slave narratives became an important literary forum for abolitionists. The Narrative of the Life of Frederick Douglass: An American Slave was written in first person, while the Narrative of Sojourner Truth was in third person. Explain what effect these two different points of view might have on a 19th century reading audience in communicating the authors’ purposes.

Both Frederick Douglass’ autobiographical Narrative and Mark Twain’s fictional Adventures of Huckleberry Finn were written in opposition to slavery. Compare the passages of these two male authors and describe any similarities and/or differences you see in the tone and style of the two authors.

Both Sojourner Truth’s autobiographical Narrative and Harriet Beecher Stowe’s fictional Uncle Tom’s Cabin were written in opposition to slavery. Compare the passages of these two female authors and describe any similarities and/or differences you see in the tone and style of the two authors’ works.

 

 

During the mid 1800s, slave narratives became an important literary forum for abolitionists. The Narrative of the Life of Frederick Douglass: An American Slave was written in first person, while the Narrative of Sojourner Truth was in third person. Explain what effect these two different points of view might have on a 19th century reading audience in communicating the authors’ purposes.

 

Both Frederick Douglass’ autobiographical Narrative and Mark Twain’s fictional Adventures of Huckleberry Finn were written in opposition to slavery. Compare the passages of these two male authors and describe any similarities and/or differences you see in the tone and style of the two authors.

 

Both Sojourner Truth’s autobiographical Narrative and Harriet Beecher Stowe’s fictional Uncle Tom’s Cabin were written in opposition to slavery. Compare the passages of these two female authors and describe any similarities and/or differences you see in the tone and style of the two authors’ works.

 

In my opinion An American Slave was much easier to read and seemed to be more interesting in that it was first person. We learned of his first hand experiences and how he felt he was wronged. For example, he mentioned that he did not understand why he was not allowed to confront his master and ask him how old he was. All he could do was estimate based on conversation and speculation. The writer also lost his mother at a young age that he could not see very often. I feel as though the piece An American Slave is more captivating and believable in that it his real life experiences.

 

The bases of these two writings are very similar although Twains book is a fictional novel. They both are very interesting in that they are talking about their experiences in a first person point of view. I also feel as though this goes after two different audiences. Twain’s book is fictional and Douglass’s is an autobiography. Douglass’s autobiography states the facts on what happens and writes based on feelings, emotions and how he feels he was wronged. I feel as though it does grasp the attention but not in the same way Twain creates his characters as a means to tell a story. They both have a common ground in attempting to paint a picture in your mind but the difference is perspective.

 

Clearly both Sojourner and Stowe both had different perspectives on each of their writings. Similarly to the previous two I find Sojourner’s personal experiences far more compelling. With that said though we are only given a small excerpt of each writing. Based on the style of Uncles Tom’s Cabin it would be hard to judge based off of a couple paragraphs in that it is about the lives of three slaves. The author of a novel seems to spend more time in painting a complete picture of all the details whereas the autobiographies concentrate on experiences and reality.

 

 

Sayre, H. M. (2011). The Humanities: Culture, Continuity and Change (Vol. 2). New York: Pearson Education. Retrieved October 16, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

In my view, the story narration style plays a major role on the impact that it has on viewers. First person account of a story is going to be very authentic and it will be one’s own feelings, thoughts and emotions being projected from the story where as the third person account is going to be someone else’s story and would be based on the data collection and observations made by the author. A third-person narrative like Sojourner Truth’s would be guided by the common themes prevailing in the society or common problems of slavery such as separation of families, hard labor and horrific sexual exploitation etc. So while the third person account may lack the polish of Douglass’s first person narratives, their impact on a reader might be even greater because of the unique problems faced by people undergoing slavery.

 

Douglass’s life narrative is an autobiographical narrative whereas Mark Twain’s “Adventures of Huckleberry Finn” is the fictional popular novel. They both wrote about the nature of racism and the practice of slavery. By portraying African-American characters, Douglass and Twain both tried to expose the hypocrisy of white Americans who believed themselves to be highly civilized and moral being. Both tried to convey that racism and slavery not only harmed African-Americans, but also those who practiced slavery. Twain makes the hypocrisy of slavery more searing than it is in Douglass’s real-life account. Douglass, in his autobiographical narrative, and Twain, in his novel, helped to redefine what civilized white society was, by exposing and condemning the hypocrisy of racism.

 

The similarity between Sojourner and Stowe’s literature lies in the fact that both of them gave the third person account of plight of slaves and revealed the grave issue of slavery that were imposed upon the African American slaves. Both these female writers described the inhumanity of the slave owners and how it destroyed the slaves physically and psychologically. The equaling of slavery to anti-Christ has been another issue that establishes a similarity between these two narratives. Because of Stowe’s work, thousands rallied to the anti-slavery cause.

 

References:

Sayre, H. M. (2011). The Humanities: Culture, Continuity and Change (Vol. 2). New York: Pearson Education.

 

 

 

 

 

 

 

 

 

 

 

 

I think there are two major elements that contributed to the difference in perspective used in the writing of these two narratives. In the case of “The Narrative of the Life of Frederick Douglass: An American Slave”, the first person voice was used because the book was written by Mr. Douglass himself. As such, it lends itself most appropriately to being written in the first person. In the case of “The Narrative of Sojourner Truth”, this story was dictated by Ms. Truth to her friend Olive Gilbert. As such, the writing of this story naturally lent itself better to a third person perspective, as it was being interpreted and documented by someone other than the person who lived the experiences. The other major factor that affects the choice of perspective would be, I believe, the genders of the two storytellers. Given the time and social environments of the writing of these books, I would venture to guess that the public at the time was more open to embracing the harsh realities of the story of a slave in the first person from a man rather than a woman. In a sense, it was almost more socially acceptable for the man to have articulated his own story, an act of assertion, than for the woman. Society in the mid-18th century still liked to view women as being the more passive, frail, and submissive gender. As such, Ms. Truth’s story was better told in the third person, which allowed for her character in her story to be viewed externally, as the object of slavery and degradation. Somehow, I think the society of that time found it easier to stomach the story of the humiliation and oppression of slavery as told by the one who experienced it if the one who experienced it and is relaying the story is male.

 

Frederick Douglass was born a slave and became educated, and eventually free, at great personal cost and through much adversity. Samuel Clemens, otherwise known as Mark Twain, was the son of a lawyer and judge in Missouri, and while he never received an advanced education at any formal institution, he did educate himself while living and working as a typesetter for a newspaper in New York City by visiting the New York Public Library in the evenings after work. Mr. Twain’s path toward literacy, and literary success, was far less troublesome than Mr. Douglass’. Whereas Mr. Douglass faced the threat of death or vicious mutilation because of his literacy, Mr. Twain developed his literacy as a matter of professional necessity (a typesetter who cannot spell or understand grammar and punctuation is pretty well out of luck). As such, it stands to reason that Mr. Douglass would always treat his writings with a more somber tone and more serious approach. Mr. Twain, on the other hand, not only writing his own work, but also seeing the writings of countless others pass before him at the printing press, learned early on that humor and frivolity could make for some of the most memorable writing. Mr. Twain infused his writing with wit and sarcasm as ways to make his subversive messages about the moral vacuousness of slavery and the general foolishness of many of the tropes of the Southern lifestyle of his youth more easily accepted by his readers, as well as more memorable and desirable to share and discuss. In short, Frederick Douglass wrote with a seriousness and severity that befit the struggle he had to undergo in order to become able to write down his experiences. Mark Twain, on the other hand, made use of more humorous literary techniques and approaches in order to underscore the messages he sought to communicate regarding slavery, as well as ensure that his writings achieved popular success.

 

Sojourner Truth’s autobiography and Harriet Beecher Stowe’s novel both decry the institution of slavery. However, the approaches taken are very different. Sojourner Truth sought to impress upon people the terrible reality of the life of a slave by giving a factual account of her own life experiences. The fact that the contents of her narrative are all actual events that occurred to a real person are meant to lend the weight necessary for this story to impress upon its readers the message that slavery is not only wrong, but deplorable and execrable. “Uncle Tom’s Cabin” was a novel, a fictional story fabricated by a white woman who had never been a slave herself. Despite the fantastical origin of the story, its message was still clearly articulated, if not more so because of the added drama. Mrs. Stowe used dramatic storytelling to create a tale that enthralled her readers and humanized a sector of the populations that, in practice, was often considered to be inhuman. Of course, considering African slaves to be less than human was a key necessity to those who wanted to keep slavery going. It would not do to have the prospective buyers of slaves believing that the slaves were suffering and enduring soul-shattering torment in their captivity. Fortunately, both women’s stories helped to achieve the same goal, despite their very different means.

 

 

Douglass, F. (1818). Documenting the American South. Retrieved 10 29, 2013, from Narrative of the Life of Frederick Douglass, an American Slave. Written by Himself.: http://docsouth.unc.edu/neh/douglass/menu.html

 

 

 

 

 

 

 

Even though Fredrick Douglas and Sojourner Truth told theirs their stories from different points of view, I believe they were both effective in communicating their purpose to the 19th century audiences. We’re studying and taking about today so it’s obvious that people listened to them. Though as dignified and both were, I’m sure they were still treated like every other negro by white men during that time. Sure they were well respected in certain environments, but they knew the harsh conditions that existed for black people as a whole. Fredrick Douglas and Mark Twain both wrote on opposition to slavery but from very different perspectives Douglas, himself a slave, wrote of first hand events – such as the instance when he’d had enough an fought back against his master – with the satisfaction and defiance that could only be expressed by someone who had gone through the events. Though a fiction novel, Mark Twain’s Huckleberry Finn adequately describes the though process and attitudes of white’s in the South at the time. At the same time, Twain ridicules those with racist views towards blacks. Both authors portray slavery in a bad light. In the comparison of Truth’s, Narrative of Sojourner Truth, and Harriet Beecher Stowe’s, Uncle Tom’s Cabin, they both approach slavery from very different view points. Truth’s passage suggests the attitude of rebellion and disgust from first-hand experience of being a slave while Stowe’s passage express the more palatable aspects of slavery – such as enlightening slaves on Christianity and tales of married slaves that defy the odds and escape to freedom.

 

 

Sayre, H. M. (2011). The Humanities: Culture, Continuity and Change (Vol. II). Boston: Pearson Education.

 

 

 

 

 

 

 

 

Fredrick Douglas and his writtings probably affected people by making them understand what it is they had to go through as slaves. This seems to be more believable because it is written directly from the source, leaving people to relate more. The Narrative of Sojourner Truth was only partly authentic as someone named Oliver Gilbert tells the story in his own words a lot of the times. With this it might not seem as genuine as Fredrick Douglass’ writtings because of first person versus third person stories. The Narrative of Sojourner seemed to tell of the struggles of women in the 1800’s and probably touched a lot of people. However, how much of this was really how it was? Although, both Douglas and Sojourner Truth knew what it was like to deal with slavery and the challenges they faced.

 

Fredrick Douglass’ autobiographical and Mark Twain’s Huckleberry Finn both talk a lot about slavery and trying to break free from it. The Adventures of Huckleberry Finn seem to have a ton of expressing their readiness for freedom but at times left me afraid for Jim . Although, the tone of Huckleberry Finn seemed a little more intense because of the confusion Huckleberry Finn faced. Huckleberry Finn wasn’t sure whether he wanted to turn Jim in or if he wanted to continue to help him try and reach freedom. Fredrick Douglas seem to have a bit of a different angle but same concept. Fredrick Douglas seem to deal with slavery head on as he fought back against his master. Although, I feel both stories had good points and expressed the need for the abolishment of slavery for good.

 

 

 

 

 

 

 

 

 

 

 

 

 

The Narrative of the Life of Frederick Douglass: An American Slave and The Narrative of Sojourner Truth both show the miserable conditions of the African American slaves. Frederick Douglass’ narrative showed a firsthand experience of the aweful life that the slaves had to suffer from. Truth’s narrative spoke of the importance of the liberation of black women.

 

The primary similarity between these two pieces of literature lies in the fact that both of them revealed the inhuman oppressions that were imposed upon the African American slaves. Both the narratives describe the inhumanity of the slave owners and both of them conveyed the hope for the ultimate freedom of the slaves from their wretched conditions. And moreover, in the portrayal of the central characters too there are similarities to be found between these two narratives. Both Douglass and Jim escaped to run away from the miseries of slavery.

 

One similarity found between the narratives of Sojounrner Truth and Harriet Beecher Stowe is that both of the authors told the story in a third person point of view. I believe they did this to draw the attention of their readers to the issue of slavery and to urge them to take steps to help end slavery forever. Both Truth and Stowe composed their narratives to make their readers aware of the nature of the slave owners who not only devastated the slaves physically but psychologically too. Both authors also compare slavery to anti-Christ.

 

Sayre, H. M. (2011). The Humanities: Culture, Continuity and Change (Vol. 2). New York: Pearson Education

 

 

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Examine three (3) of Karl Marx’s contributions to economic theory and determine how they still impact contemporary economics Answer

Examine three (3) of Karl Marx’s contributions to economic theory and determine how they still impact contemporary economics.

Karl Marx’s contributions to economic theory

1) An ideal economic system would involve exchanges of equal value for equal value, where value is determined simply by the amount of work put into whatever is being produced. Capitalism interrupts this ideal by introducing a profit motive — a desire to produce an uneven exchange of lesser value for greater value.

2) A laborer might produce enough value to feed his family in two hours of work, but he keeps at the job for a full day, in Marx’s time, that might be 12 or 14 hours. Those extra hours represent the surplus value produced by the worker. The owner of the factory did nothing to earn this, but exploits it nevertheless and keeps the difference as profit.

3) In this context, Communism thus has two goals: First it is supposed to explain these realities to people unaware of them; second it is supposed to call people in the labor classes to prepare for the confrontation and revolution.

Karl Marx contributed to economic theory the centralization of capital and concentration of wealth. He stated the falling rate of profit is but one of the insoluble problems of capitalism (Brue & Grant, 2007) . Second the tendency for increasingly sever business crises. (Page 182) He also contributed his theory of “The Law of Motion of Capitalism” and the labor theory of value. He argues that labor is the source of all value and is the starting point to his theory. Marx’s approach to the tendency of the rate of profit to fall was unique. It is rooted in his distinction between constant capital, which merely conserves its existing value—hence the term constant capital—and variable capital, which not only reproduces its existing value but produces surplus value, the sole source of profits and rents including interest and all the secondary incomes that derive from them. There are various forces that counteract the fall in the rate of profit. The rise in the productivity of labor tends to lead to a rise in the rate of surplus value that counteracts the fall in the rate of profit. Second, as the productivity of labor rises, the elements—the commodities—that make up the constant capital, also fall in value.

References:

Deepankar Basu, Panayiotis T. Manolako (2007). Is There a Tendency for the Rate of Profit to Fall? Econometric Evidence for the U.S. Economy. University of Massachusetts – Economics Department Working Paper Series Economics.

Karl Marx appeared to have very similar ideas as it relates to the rate of falling profit. He appeared to agree with not only Ricardo but also Adam Smith and Mill to some extent. Karl Marx believed that the potential destruction of capitalism would be due to a falling rate of profit. Ricardo, Smith, and Mill also predicted that a rate of profit would also fall but over an extended period of time. Marx recognized that under capitalism wages were determined by labor markets, Marx concluded that wages would at first increase and reduce profits, but that capitalists would then eventually use laborsaving technology to to put human workers in competition with machines, thereby driving back down the price of labor.

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bell rings, signaling a new day in Mrs. Brooks’ 2nd grade classroom. As the students quietly enter the room Answer

In the following scenario, determine which level of behavior management is addressed and describe the factors involved that led you to these conclusions:    Scenario Two – DQ2 The bell rings, signaling a new day in Mrs. Brooks’ 2nd grade classroom. As the students quietly enter the room, they go directly to their lockers, put away all of their personal items, and take out their daily folders, which they place in a special daily folder basket next to the doorway. Students then choose a book for independent, silent reading at their desks until the morning announcements begin. Mrs. Brooks moves around the room handing out tickets (which may later be traded in for prizes) to students who are on task. After the announcements, Mrs. Brooks calls the class to the rug in an open area of the room for the morning meeting. Josh is chosen from a set of cards as the Student of the Day. Michael is upset that Josh is chosen over him, and complains that it is unfair. Mrs. Brooks moves into close proximity to Michael and reminds him that everyone will get an opportunity to be the Student of the Day and that his turn will be coming soon. As Michael continues to complain, Mrs. Brooks calmly gives him a warning, which is the next step in her classroom behavior management plan, then proceeds with the routine. Michael continues to interrupt the class and is instructed to turn his card from green to yellow, meaning that he will miss 10 minutes of recess later in the day. For the rest of the morning meeting, Michael behaves appropriately  

 

 

 

 

This scenario is seated firmly in the first level, inclusive proactive management activities. Several factors are present which led to this belief. Routines are firmly established and have specific steps, the teacher is calm and all seems well organized. A system of positive behavior recognition is in place. The teacher is alert, uses proximity control with a positive reminder and then, after that is unsuccessful, utilizes an established tangible behavior management plan to which the rules and expectations have been explained.

 

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How do you manage requirements and prevent “scope creep”Answer

Project foundations (operational requirements, system requirements, design constraints, and software requirements) determine the scope of work to be accomplished in a project. I have seen situations where the project was constrained by scope and schedule. How do you manage requirements and prevent “scope creep?”

Scope creep is every project team’s nightmare. Scope creep happens when a project team is no longer capably of controlling the growth or changes defined in the scope. This is why is very important to define and have all the stakeholders understand and agree to the scope of the project, including what’s out of scope. We all do understand that there may be requirement and requested changes that may occur during the life cycle of the project. But the project team should have a well defined change control policy in place to help address such situations. Request changes should be well documented in a change control log which should then be reviewed and addressed by the change control team. Final decisions should be made on not just if the changes fall within scope but also the impact of the requirement and or requested change on the overall timeline and cost.

scope creep is the worst thing that can happen in a project. Although all things are inevitable, situations occur that are out of our control, we must know that there are risk involved, no matter how hard we try to keep the project within its deadlines. When you working within a project scope you have a set schedule that is provided within a budget. Everything you do within a project is accounted for based on you WBS (work breakdown structure). If something is added by the client, this will cost the project money. If the supplier/vendor/manufacturer is not on time with a shipment and the project has a deadline, this will create additional cost for the project. Once the scope, schedule and budget have been impacted you have a major problem.

Project Scope creep has many different names such as focus creep, feature creep, function creep, and requirement creep. Project scope creep in project management refers to uncontrolled changes or added objectives in a project’s scope. This phenomenon can occur when the scope of a project is not properly documented, defined, or controlled. It is generally considered a negative occurrence, and thus, should be avoided.

I do agree that Scope Creep can be a nightmare. If requirements change, I would evaluate the project and look at deadlines, deliverables, costs, etc. Most important is to evaluate how the change in requirements will affect the critical path aka the key indicator to determine if the project will be on schedule or will be late. If Scope Creep causes the critical path to change so the project will be late, I would call a meeting to look at options: Increase resources, cut back on features, adjust schedule for resource optimization, etc. Key is good communication and coordination. If stakeholders and sponsors understand and accept the consequences of their new requirements, then the project can be adjusted accordingly.

Scope creep is unavoidable, but it can be mitigated. By fully understanding the project vision and priorities of the stake holders then scope creep can be relegated. Having clear deliverables and milestones goes a long way in preventing scope creep.

Sometimes scope creep sneaks up on us and sometimes we simply don’t focus enough! Either way it is the same ending….   over schedule, over budget and quality may be greatly impacted! how often do you update the team on milestones and tasks? Do you hold regular meetings? What seems to be the best time for your team to meet?

Milestones and task updates should happen at every scheduled meeting. It should be included in the agenda with the expected completion date and a status. Meeting times should be defined and agreed on by the project team as part of the communication plan. Project team should decide on a date and time that works for the majority of the team members as a start. But the project team may have to change the times down the road so it works for the stakeholders that may be involved at that stage of the project.

Based on a study, one of the best times is Tuesday 3pm.

When Is the Best Time to Conduct Meetings and Important Business?

In most of the training sessions I attended, they recommend mid-morning meetings work best. At my current job, meeting occur anytime. In my experience, any meeting at the end of the day is worst and most likely to be cancelled or skipped.

Scope Creep is a possibility anytime you have people involved. So that is pretty much always. It is very likely that a project is planned out and ready to start work and the requirements change or like Villa stated the vendors are late or don’t have the part. Scope creep only becomes a problem when the customer is sitting around waiting for a deadline that has been blown out of the water. An article I read on projectmanager.com sums up five steps to help eliminate scope creep.

  1. The requirements must be documented. Especially if the requirements have changed. These notes are important to note that way everyone is on the same page.
  2. A change Control must be set up. This way changes are not just flying by the seat of the pants.
  3. Create a clear project schedule. This eliminates surprises.
  4. Verify the scope with stakeholders
  5. Talk with the project team

http://www.projectmanager.com/5-ways-to-avoid-scope-creep.php

How does scope creep happen? Are we not managing to requirements? or are we managing to the customer?

Poor planning will eventually lead to a potential scope creep. Lack of knowledge of what you want and what it will take to get the job done and the absence of a well defined change control are the major causes of scope creep. There is no doubt that managing scope creep can be challenging but allowing it to spin out of control can be disastrous to the project as well. Every opportunity should be explored to help minimize if not eliminate uncontrollable situations. I also think managing the requirements is as important as managing the customer. Expectations should be set at the start of the project with all the stakeholders. poor planning has the biggest impact of scope creep.   Knowing so much information from the beginning what the customer wants somehow can prevent some of the scope creep. But life is not perfect and customers wont really know what they really want until project start start to become reality. On the other hand, I think we are managing to the customer more that we should which I really do understand. Now a days, cash is hard to find so anything to save a project we will do. Sponsors do not grant extra funds that easily in scope creep cases so Brenda has a good point with proposing her disagreement.

To be brief the scope creep is a result of poor scope management. Any insufficient effort on the following listed processes will enhance the risk of scope creep while managing projects. But scope creep could be considered as one of the project risks and a contingency plan to be developed for any given risk of scope creep .The required budget could be set aside in project contingency if a scope creeps happens.

1) Not having a sufficient/practical scope management plan.

2) Unclear scope management process

3) Insufficient collect requirements process from stakeholders

4) unclear and not well completed WBS and work breakdown dictionary (the work breakdown structure can best be thought as an effective aid for stakeholders communication)

I addition, the process of verifying scope (the process of a progressive scope verification in compliance with the stakeholders requirements) and control scope is in most when preventing scope creep.

Scope creep usually is a combination of both, but when the customer becomes uncontrollable with changes scope creep becomes a huge factor. Without putting in boundries such as change control mechanisms the customer can change the requirements and scope of the project day to day so to speak. So managing to the customer is can get you in trouble once the requirements have been defined and agreed upon.

Scope creep can happen a number of ways. Below are some situations that can cause scope creep:

Poor Requirements Analysis: Customers don’t always know what they want

Not Involving the Users Early Enough: Thinking you know what the users want or need

Underestimating the Complexity of the Project: Nobody knows what to expect, there are no lessons learned and no one to ask.

Lack of Change Control: it is important to design a process to manage these changes

Gold Plating: This term is given to the practice of exceeding the scope of a project in the belief that value is being added

How can monitoring the project help to minimize this?

Controlling the scope of your project begins before the first line of code is written. Every development effort should have a corresponding project plan or project agreement, regardless of the situation. Even if you’re just one developer trying to make the boss happy, you’ll benefit greatly from documenting your efforts before you begin them. Use the following guidelines to set yourself up to successfully control the scope of your project:

1.Be sure you thoroughly understand the project vision. Meet with the project drivers and deliver an overview of the project as a whole for their review and comments.

2.Understand your priorities and the priorities of the project drivers. Make an ordered list for your review throughout the project duration. Items should include budget, deadline, feature delivery, customer satisfaction, and employee satisfaction. You’ll use this list to justify your scheduling decisions once the project has commenced.

3.Define your deliverables and have them approved by the project drivers. Deliverables should be general descriptions of functionality to be completed during the project.

4.Break the approved deliverables into actual work requirements. The requirements should be as detailed as necessary and can be completed using a simple spreadsheet. The larger your project, the more detail you should include. If your project spans more than a month or two, don’t forget to include time for software upgrades during development and always include time for ample documentation.

5.Break the project down into major and minor milestones and complete a generous project schedule to be approved by the project drivers. Minor milestones should not span more than a month. Whatever your method for determining task duration, leave room for error. When working with an unknown staff, I generally schedule 140 to 160 percent of the duration as expected to be delivered. If your schedule is tight, reevaluate your deliverables. Coming in under budget and ahead of schedule leaves room for additional enhancements.

6.Once a schedule has been created, assign resources and determine your critical path using a PERT Chart or Work Breakdown Structure. Microsoft Project will create this for you. Your critical path will change over the course of your project, so it’s important to evaluate it before development begins. Follow this map to determine which deliverables must be completed on time. In very large projects, I try not to define my phase specifics too early, but even a general plan will give you the backbone you need for successful delivery.

7.Expect that there will be scope creep. Implement Change Order forms early and educate the project drivers on your processes. A Change Order form will allow you to perform a cost-benefit analysis before scheduling (yes, I said scheduling) changes requested by the project drivers.

http://www.techrepublic.com/article/seven-steps-for-avoiding-scope-creep/

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Which of the four lead time elements discussed on page 279 might cause the most difficulty Answer

Which of the four lead time elements discussed on page 279 might cause the most difficulty? Why? Why might other lead time elements be less important?

Queue time frequently accounts for 80 percent or more of total lead time; it’s the element most capable of being managed. Reducing queue time means shorter lead time and, therefore, reduced work-in-process inventory. This reduction requires better scheduling. Queue time can be compressed with good PAC design and practice.

Reference: Textbook

Out of the four elements queue would cause the most difficult of all. Since queue time is the period of time during which the product awaits transfer to a workstation, undergoes further inspection and subsequent manufacturing processes. It is the single largest element in the overall lead time and its elimination is critical for successful drive toward manufacturing process. The reason why other lead time elements be less important than queue time is because queue is the amount of time a lot must wait at a work center before the operation is set up and production begins.

What does the textbook say about queue time that may not make it the most difficult to manage? And since it may not be the most difficult, which of the remaining three elements is the most difficult to manage? And why?

I think run time would be the hardest to manage, because how ever long it takes to run the lot size is how long it takes(5 seconds per lot or 5 hours per lot), the run time is pretty much set . Managers can not make the machines go faster . Run time is typically the most difficult to manage because you have a plethora of factors that impact how effective the “run” or the “process” is. Some of these include employee skill sets, employee experience, machine/equipment slippage, process slippage, documented procedures vs. tacit knowledge, time of day, time of week, status of customer satisfaction, etc.

I think that all four elements have their own individual challenges and obstacles that will need to be overcome. The Run time does seem to me to be the most difficult to alter or speed up. You can only run a machine as fast as it is designed to handle. There is always the option of upgrading equipment when available to get faster results from them. The likely hood of being able to purchase upgraded equipment is not good so therefore keeping your equipment well maintained and running at optimal speed is the best that can be expected to keep things running smoothly.

With most of the process parameters being fixed, the run time is the most difficult to manage. This is followed by the setup time. These are pretty much technology/process dependent and there is a little room for change/improvement. Mostly, the change would come with the upgrade in the equipment or chane in the process which is a costly affair. Probably the move time and queue time is easy to manange as there is a lot of room for process improvement here and Textbook also mentions that Queue time frequently accounts for 80 percent or more of total lead time; it’s the element most capable of being managed.

 

If queue time and move time are easy to manage, what does it do to the overall lead time?

Move and queue time can be compressed with good PAC design and practice. Reducing queue time means shorter lead time and, therefore, reduced work-in-process inventory. Queue time represents slack that permits the choice of alternative schedules. This slack can be removed by good SFC practice. With the ability to manage queue time and move time it will allow you to tighten these areas if you need to make up time to meet deadlines. So having areas that can be altered easily or contained will allow you to make up in areas that are not so easily maintained.

However, move time would be the next easiest. Queue time and Move time are the two elements most capable of being compressed. Does this make sense?

Of the four elements of lead time, which element might cause the most difficulty, and why? Also, why might other lead time elements be less important?

 

What would cause the delays with move time? Also, isn’t the actual delay considered queue time?

I think there is a fine line between queue time and move time because they seem to be ralated to each other in a way. If there is less queue, move time will be minimal. On the other hand, if there is a long queue, the delay cause by the queue will mean that it will take a longer time to transition from one work center to another.

A delay in move time could be caused by an issue that has happened in the next work center such as a machine breaking down or resources not being available to further the production. Move time differs from queue time in that move time is the delay of waiting to be moved plus the time spent moving from one work center to another where as the queue time is the time spent waiting to be processed at the work center. Queue time is the most critical because it usually counts for 80% or more of the total lead time in production. In order to reduce lead time you must reduce queue time or work-in process which requires good scheduling

Jacobs, Berry, Whybark and Vollmann. Manufacturing Planning and Control for Supply Chain Management, 6th Edition. McGraw-Hill Learning Solutions, 2011.

Queue, move, and setup time are dependent on run time. Additionally, with queue time…, it is the only element that does not directly relate to the product being produced. It can be the cause of any of the other 3 elements. Remember, queue time is wait time for something to occur; and that can be caused by delays, lengthier than normal run times, backlogs, etc.

Run time is typically the most difficult to manage because you have a plethora of factors that impact how effective the “run” or the “process” is. Some of these include employee skill sets, employee experience, machine/equipment slippage, process slippage, documented procedures vs. tacit knowledge, time of day, time of week, status of customer satisfaction, etc.

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Provide a description the internal and external feedback mechanisms of the Welfare System Answer

Provide a description the internal and external feedback mechanisms

Provides a description of the information generated from feedback

Discuss how the program has been changed as a result of the evaluation

APA format

 

Feedback and Evaluation of the Welfare System

Over time there has been a need for policy implementation based on public reasons. Many years of different types of government have found ways to created public policy for issues that needed some applied regulations or laws. The federal welfare system is one of the policies that often needs’ continual evaluation. Over time public policy revealed some regulation and terms from the original thoughts of implementation, to changes that may be useful based on the needs or failures of the original policy. In the process of evaluation once a policy has been initiated there are key factors that tie in the success of policy involving internal and external mechanisms through evaluators. Public policy and program evaluation is a newer addition in the last 50 years to the history of the nation’s chain of attempts to use the brainpower from scholars, research experts, and scientists to further the interests of the state and constituents. Evaluation is asked to provide retrospective assessments (feedback) of the implementation, output, and outcome of government measures in order to create deeper understanding and well-grounded decisions involved through government operations such as the welfare system. The feedback initially grants the reason for policy change in the welfare system or other factors related. This paper details internal and external feedback mechanisms found in the welfare system, information generated from the feedback, and any program changes as a result of the evaluation of the history of welfare.

Original Implementation of Public Welfare Program

The welfare system was first established as a federal program, taking place during the Great Depression where Congress enacted an Aid to Dependent Children, also known as the ADC. This was originally created as a modest program to focus on widows, orphans, divorced or deserted mothers, and their children (Welfare, 2011). The creation had much to do with the loss of the husbands and availability to support the household with only the women home because the men provided the sole income and support of the household. By 1939 the ADC program covered only about 700,000 people and at least two-thirds of eligible children were not covered (Welfare, 2011). By 1960 the welfare program had grown to provide assistance to close numbers of over three million people. As the growth accelerated from the 1960’s and 70’s the program name had been changed to “Aid to Families with Dependent Children” (AFDC), which would again be changed in the future from evaluations. The program changes that were affected in the history through the current implementation of the program from state to state had many factors involved that included internal and external feedback to warrant some changes.

Internal and External Feedback Mechanisms

            Experiences with implementing many programs during the 1960’s, such as welfare, suggested the need for careful appraisal of the impact of such programs (Theodoulou & Krafinis, 2008). Many people believe that the evaluation of a policy is reached at the end of policy cycle. However, according to Theodoulou and Krafinis (2008), “such a viewpoint would neglect the consequences of policy evaluation as well as how the old policy often leads into a new policy cycle.” The federal government wants to know how much money is spent for a particular program, amount of persons to service the program, service cost, and effectiveness of the program in relationship to the cost, known as internal factors. Of all factors the one most important to evaluating a program is whether the program resulted in positive benefit or made the problem worse. Each component of the process is related to a type of evaluation relating to feedback and often uses the impact evaluation or policy evaluation to measure outcomes.

The appraisal and evaluation of program implementation involves internal and external mechanisms. The welfare policy in America comes from an evolution of societal perceptions and expectations driving the “culture” for a deliverance of system that will provide services and benefits to those who need the program. The internal feedback mechanisms involve the budgets, policy actors, reaching intentions of the policy, and policy applications according to each state. Because the budget must be met with good reason evaluation often reveals the ability of keeping the program active or changes needed. The impact evaluation mechanism may be useful at this point to give internal evaluators proper details to compare program outputs and inputs such as the General Accounting Office (GAO) or such offices Congressional Budget Office (CBO) to evaluate the program expenses versus original intent. The ability to establish communication linkages through internal mechanisms can help provide feedback to policy-makers and program administrators at several points of the welfare system and how it is delivered. This includes the front-line, middle managers, and other service providers that may include non-governmental partners. The internal mechanisms provides continual reassessment’s based on the aspect of the original vision and the policies to see what works best and what may need revision.

Although internal feedback mechanisms are vital and found to be a necessity, the external evaluator can also provide valuable input for the policy makers. The value of the information relates to social areas and cultures that depend on the support of the welfare system. How the people detail feedback based on what needs were met can feedback what is needed to improve the program. The external feedback mechanisms reveal the constituents, program users, and outcome of the policy feedback in use, based on social areas or public interest, and economic situations.

Information Generated from Feedback

            Information generated through feedback may be warranted but not always welcomed in practical thought from the management of the program. However, a major advantage of internal evaluation is that insiders will have the detailed knowledge of what is involved in delivering the policy or program (Theodoulou & Krafinis, 2008). One evaluation taken was the need for cost efficiency of the 60’s to push for reform and again in the 90’s. The original implementation of welfare was to help the widow and children but over time through evaluation the policy implementers began to address the issue of other needs for the program. This happened in the early 1990’s when welfare reform of the Personal Responsibility and Work Opportunity Act was created (Welfare, 2011). This added additional guidelines based on evaluation changes that had become evident by the growth rate of participants on the welfare program through the years.

Based on the internal and external mechanisms of evaluation, change is warranted and the shifting of the welfare policy created a reason to initiate that participants take self responsibility and get a job. There are also disadvantages, such as the insiders may not have the specialized skills to do a good evaluation and evaluation may be affected by the insider’s un-willingness to make major changes. This is because they have a specific stake in the maintenance of the program status such as becoming un-employed and changes suggested may not be welcomed. The program recipients were not happy with the regulation changes set forth by President Clinton because some people would be forced to seek work. Both internal and external evaluators deliver information that communicates’ particulars that stimulate a need for change. Time reveals what may be needed as economic shifting takes place. The programs will endure shifting to create the change even if not be welcome, but needed.

Program Evaluation and Changes

Evaluation is often a controversial and hard-to-understand strategy of public governance, decision-making, and control. The public policy and evaluation of a program is a mechanism for monitoring systems and government programs. The results help constituents and policy actors to act accordingly and move with changes warranted. Times of need in the public policy realm changes often and may have determining factors that place constraints on policies, such as the economic conditions of the nation (unemployment rate) and guidelines of change One of the ways to evaluate program is known as the evaluation rationality. The models of evaluation and theories such as the impact theory relating to how the program impacts or process evaluation theory are all part of social investigation. Pre-experimental Designs and One-shot case studies are both analyses of what happened at some level of the policy process to determine if change is warranted based on the behavior of the condition. The welfare program has changed from being a main support of widows, children, and single mothers to being a conjoined effort program that aids the needy people and poorer areas of society. In 1992 President Bill Clinton was elected and promised to end welfare as people knew it and in 1994 based on evaluation of more than 14.2 million welfare recipients, a figure of change was warranted. The change added that jobs become part of the programs intent and maximum of three years of continual program usage be placed to regulate some cost control and still help the needy. Evaluation has much to offer policy makers, but is used less often due to competing pressures of interest. As the welfare system has changed over the last 50 years continual evaluation reveals that change will be continual based on world factors. This change also indicated that people needed to example more self-responsibility and may generate a more confident level of social existence in that area of society to create a chain of leadership for changing culture. As a result of the evaluation, changes placed were successful and lowered the amount of people who were on welfare overall. Evaluation is the process of distinguishing the worthwhile from the worthless, the precious from the useless; evaluation implies looking backward in order to be able to steer forward better and the changes made to the welfare system demonstrate a nonlinear shift.

References

Welfare.(2011). Retrieved November 10, 2012, from Almanac of Policy Issues:

http:/www.policyalmanac.org/social_welfare/welfare.shtml

Theodoulou, S., & Kofinis, C. (2004). The art of the game: Understanding American public policy making. Belmont, CA: Thomson.

 

 

 

 

 

 

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Explain what is meant by the term “value” in a supply chain Answer

Explain what is meant by the term “value” in a supply chain. How can it be best measured in a supply chain? How does increasing value in a supply chain help align supply chain operations to the business mission?  Respond to at least two of your fellow classmates’ postings.

 

Explain what is meant by the term “value” in a supply chain.

Value can be added, or viewed in many different forms.  Probably the most well-known is shareholder’s value.  Shareholders value is created anytime, by any legal method,   which adds to the overall financial wellbeing of the company.  Value for the stockholder is created when their return on investment (ROI) in your company is greater than it would be in a comparable risk investment.

How can it be best measured in a supply chain?

In managerial finance there are many ways to measure value but, the best way is to use ratio analysis combined with other data.  You can make a ratio out of any two or more numbers by dividing them in some form into each other.   In managerial finance there are many standard ratios that are used to analyze value of a company, or investments, for example: net present value (NPV), Return on Assets (ROA), Return on Investments (ROI) and many others.  “Return on investment is an important measure that is widely used to assess shareholders value” (Harrison & Van Hoek, 2012, p. 75).  ROI is profit * 100/capital employed or a different formula that is the outcome of profitability and asset utilization is:   ROI = 100 * profit/sales * sales/ capital employed.

ROI can also be used as a great tool to show “The Boss” that an individual project or improvement is cost effective and profitable. Another way of stating ROI is: the ratio derived from   the sum of the improvement benefits divided by the sum of the costs of the improvement. A 40-to-l ratio, for example, means $40 of benefits was derived from every $1 of cost.  ROI   can help justify the cost of quality improvement projects, determine the value of continuing a project already under way and determine the overall organizational effectiveness of an implemented quality initiative.  How does increasing value in a supply chain help align supply chain operations to the business mission?

 

Managing supply-chain operations is critical to any company’s ability to compete effectively. The supply chain has traditionally been managed as a series of, compartmentalized business functions. It was driven by manufacturers who managed and controlled the pace at which products were developed, manufactured and distributed.  However, customers have   forced increasing demands on manufacturers for options/styles/features, quick order fulfillment, and fast delivery.  With the long-time competitive differentiator of manufacturing quality   starting to be non-differentiated across the board, meeting these customer demands has emerged as the next critical opportunity for competitive advantage by efficient supply chain management.  Maintaining competitive advantage likewise forces constant redirection and enhancement of product features, quality, cost, options and services.  “Supply-chain   effectiveness has therefore joined product quality and time-to-market as a key competitive differentiator. Success for many companies now depends on their ability to balance a stream   of product and process changes with meeting customer demands for delivery and flexibility. Optimally managing supply-chain operations has therefore become critical to companies’ ability to compete effectively in the global marketplace” (Gordon, 1997, para. 1).  In today’s world you cannot compete effectively without a well-developed supply chain.  Emphasizing the importance of supply chain operations will develop value by eliminating non-value added steps.  To develop an efficient supply chain that adds value to the company and shareholders as well as meeting the needs of today’s customers and supply chain partners all sections of the supply chain must share common goals, and concentrate on the end

References

Gordon, S. (1997). Supply-chain Operations. Logistics Information Management, 10(2). Retrieved from http://search.proquest.com.proxy-library.ashford.edu/docview/220041033?accountid=32521

Harrison, A., & Van Hoek, R. (2012). Logistics Management & Strategy (4 ed.).  London, England: Prentice Hall Financial Times.

mission of customer satisfaction .

 

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How has the FCC functioned as an “enabler” and “promoter” for the development of “advanced telecommunications services Answer

How has the FCC functioned as an “enabler” and “promoter” for the development of “advanced telecommunications services”?

The FCC does both (enable and promote). The FCC at first even promoted monopoly and then they enabled AT&T to stay in control of the industry after the monopoly was dissolved.  It encourages infrastructure and it also promotes the public’s best interest  by promoting the  Universal Service Fund.

If the FCC is the source of regulation of telecommunication and other media plateaus. The FCC have the power of control and censorship. With the ability to control regulations you create a market or rules that cater to their specifications and want. It has the ability to allow what they deem to be appropriate and they can promote what meets their expectations.

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What are the positive effects of managed care on our healthcare system Answer

What are the positive effects of managed care on our healthcare system? What are some of the problems created by managed care that have been identified by patients, providers, and interest groups?

The positive effects of managed care are; managing a person health care along with controlling cost. When one person follows the patients health and controls where they go and what they do and what medications they take it allows a patient to receive controlled health care along with cost control. They have to get referrals to other providers and when the provider sees the patient the provider must write back to the gatekeeper to keep them informed of the care necessary for their patient. The patient is somewhat safer in a way when one person is following their entire care plan.

Managed care was a gatekeeper where one provider followed your care and you needed a referral to see anyone else. Whereas Medical home is where you receive all your medical care or most of your medical care within that home. There are many providers who work within your medical home and see those providers so it is a little different. The Patient Centered Medical Home is a care delivery model whereby patient treatment is coordinated through their primary care physician to ensure they receive the necessary care when and where they need it, in a manner they can understand. The objective is to have a centralized setting that facilitates partnerships between individual patients, and their personal physicians, and when appropriate, the patient’s family. Care is facilitated by registries, information technology, health information exchange and other means to assure that patients get the indicated care when and where they need and want it in a culturally and linguistically appropriate manner.

http://www.acponline.org/running_practice/delivery_and_payment_models/pcmh/understanding/what.htm

Managed care has introduced changes, such as cost effectiveness, access to care, and quality of care, to many components of the U.S. healthcare delivery system. These changes have affected how healthcare administrators and clinical practitioners perceive the impact of managed care on healthcare delivery practices. A survey was initiated to explore whether the perceptions of administrators differed from those of practitioners and to discover which organizational variables could explain the difference. A descriptive, cross-sectional survey design was used for the target population of administrators and practitioners in high, moderate, and low managed-care-penetration markets. Two investigator-developed instruments–the Managed Care Perceptions Inventory (MCPI) and the MCPl-Demographic–and an intact centralization of decision-making assessment subscale were used for data collection.

http://www.highbeam.com/doc/1G1-109666202.html

Managed care has been known to be used very differently from primary care. The trends in the 1990s were that under the guise of care coordination, turned many providers of primary care into gatekeepers who, in fact, mostly denied care. Managed care was a concept which took awhile for people to understand. We were used to seeing who we wanted and getting care from any provider at any time. When managed care came a long it was difficult to have one person in charge of our medical care. We had to see the doctor in order to get a referral to see another doctor. It was a tough concept to grasp. However, millions are on managed care programs now, and many more are enrolled in PPO plans, so they have more control over where they can go with a little more cost involved. Managed care is a great program for people who need cheaper medical care, where as PPO plans are HMO with a little more benefits that cost more if you prefer to out of network.

Source of the Problem: Employer Provision of Insurance. It is self-evident that the interests of the employer are different from those of the employees. Employers, of course, compete for workers in the labor market by offering fringe benefits in addition to wages. And the more generous the employer’s health insurance, the more attractive the job. But the employer’s primary interest is in healthy employees. Other things being equal, no employer has an incentive to advertise that the company health plan has excellent coverage for alcoholism and drug abuse, chronic conditions or other expensive-to-treat diseases.

Source of the Problem: Perverse Incentives for Insurers. In today’s environment, individuals are often able to exercise choice among options created by an employer or plans competing in a regulated market. However, many health plans are required to charge the same premium to every applicant, regardless of expected health care costs. Under this one-price-for-all rule, the premiums sick people pay are well below the expected cost of their treatment, while the premiums of healthy people are substantially higher.

As a result, health plans face extremely perverse incentives to avoid the sick and attract the healthy. Indeed, plans that attract a disproportionate number of sick people eventually fail and leave the market. But since health plans cannot discriminate among enrollees on the basis of price, they tend to make quality adjustments instead. Specifically, each plan has an incentive to underprovide services to the sick and overprovide services to the healthy.

Solution: Individually Owned Insurance. Most people with private health insurance obtain it through an employer. The reason is the federal tax law, which excludes employer premiums from the employee’s taxable income. This tax subsidy can reduce the cost of health insurance by 30 percent or more for an average-income family. By contrast, individuals who purchase their own insurance receive little or no tax relief. In addition to encouraging employer-based health insurance, the current system encourages waste. Since an extra dollar of earnings can be used to buy a dollar’s worth of health insurance as an alternative to 70 cents of take-home pay, employees have an incentive to obtain too much health insurance, covering items that could have been purchased more efficiently out of pocket or might not have been purchased at all. We propose a neutral tax policy that eliminates these distortions.

 

As an alternative to employer-provided health insurance, employees should be able to purchase their own insurance and get similar relief under the tax law. They should get a tax credit that encourages them to purchase “bare bones” catastrophic insurance – leaving them free to purchase additional coverage with their own money. Employers should be able to help employees obtain individually owned insurance by supplying information, negotiating group discounts, etc.

The advantages of these proposals are clear:

  • Employees would be able to purchase insurance tailored to their needs, rather than insurance selected by their employer.
  • People would have portable insurance that travels with them on their journey through the job market.
  • Tax relief would extend to the self-employed and others who do not have employer-provided coverage.
  • The limited tax subsidy would assure that the purchaser, rather than taxpayers, would bear the full cost of extra, nonessential coverage.
  • Those who want to continue under the current system would be free to do so.

Solution: A New Medical Savings Account. Although current tax law subsidizes the payment of employer-based third-party insurance premiums, it provides virtually no tax relief to those who self-insure by putting funds aside to pay medical bills directly. Thus the tax law encourages us to turn over all of our health care dollars to a third-party manager. The exceptions are two MSA pilot programs – one for the elderly on Medicare and the other for small businesses and the self-employed. Yet these tax-advantaged MSAs are inadequate to deal with the challenge of managed care for three reasons:

  • Contributions to tax-free (pilot project) MSAs can be made only by those with high-deductible plans – thus excluding enrollees in HMOs and most other managed care plans.
  • The MSA deposit is mainly designed to pay deductible expenses and is exhausted at the point where third-party (often managed care) payment takes over.
  • After the insurance period (usually one year), withdrawals from the MSA face taxes and penalties unless they are used to purchase medical care – a feature that forces the MSA to operate less like real self-insurance and more like prepayment for the consumption of medical care.

To remedy these defects and give MSAs more flexibility, we propose to make the tax law more neutral with respect to the use and withdrawal of MSA funds. Specifically:

 

  • People who take advantage of the new tax credit should be able to make deposits to a new type of Medical Savings Account.
  • The new MSA is designed to wrap around third-party insurance – providing funds with which to pay any uninsured medical expense. [See the diagram.]
  • Deposits to the MSA would be made with aftertax funds, and withdrawals for any reason would be tax-free.
  • Like the previous set of proposals, these would create a new option without taking away any current option.

Again, the advantages of these proposals are clear:

  • Enrollees in HMOs and other managed care plans would be able to make MSA deposits and use the funds to pay nonnetwork doctors and purchase diagnostic tests and other services not covered by their health plan.
  • Employers and insurers would have much more flexibility in designing plans; for example, they could provide first-dollar coverage for some services (e.g., preventive tests with proven payback) and high deductibles for others (e.g., general checkups) without jeopardizing the ability of the insured to have an MSA.
  • A special type of fee-for-service plan – one that pays fixed fees for services and procedures – would become more viable because if the scheduled fee proved insufficient, people could use their MSA funds to pay the difference.
  • Because MSA withdrawals would be tax-free, people could make risk-free MSA deposits – secure in the knowledge that they could have their money back without penalties if they had no medical expenses.
  • Because MSA withdrawals would be tax free, people in future periods could make unbiased choices among medical care, other goods and services and personal savings.

These proposals – if implemented – would change the ways the private marketplace responds to the perceived deterioration of health care quality that has emerged with managed care.