Question

#8 The cost of hiring workers includes not only payments made directly to workers, that is, wages, but payments made on behalf of workers as well, such as contributions by employers to pension plans and to health-care insurance for employees. How would a decrease in the cost of employer-provided health insurance affect the economy?  

 

CH8 

#1.Suppose the people in a certain economy decide to stop saving and instead use all their income for consumption. They do nothing to add to their stock of human or physical capital. Discuss the prospects for growth of such an economy. 

#4. China’s annual rate of population growth was 1.2% from 1975 to 2003 and is expected to be 0.6% from 2003 through 2015. How do you think this will affect the rate of increase in real GDP? How will this affect the rate of increase in per capita real GDP? 

#10. Suppose that for some country it was found that its economic growth was based almost entirely on increases in quantities of factors of production. Why might such growth be difficult to sustain? 

Answer 1

so to look at how health care insurance provided by the employeer affects the economy, to discuss this issue we have look on how the economy is dependent on the health care sector and then only we will be able to analyze the situation more clearly and we will get a better perspective of it. it is essential to know that nearly one-sixth part of GDP is dependent on health sector and it accounts for major chunk of service-related job in economy, and while breaking the expenditure into small different components that include the whole spending and most of the money paid goes to health care service provider mainly to doctors, hospitals, purchasing drugs, medical devices also count for a major chunk of total expenditure however medical insurance is slowly but steadily capturing the whole market and has widely affected the whole sector. definitely health care program has a certain effect on firms and even sometimes firm decision to provide medicare has a huge impact on their decreasing revenue as these funds which are used for providing the services to the employees can be utilized in developing new technologies and in creating infrastructure which will ultimately provide job to many more, definitely by investing money on healthcare programs is somehow also creating job but they have limited applications as compared to their impact on investment in other sectors, job creation in health care sector is very low, even this money can be used to bring medical breakthrough which can be helpful for us in lowering the overall cost of the medical facility and a large portion of society will be beneficial for this but by just providing the medical facility will not solve the long term problem existing in the society. on carefully examining the prices of insurance premium in recent decades they are increasing exponentially and it becomes a burden of the employer to pay for its employee health premium insurance according to a recent survey by medical association they came to know that the prices of health premium insurance rose to around 120% between last decades and making it a problem for many firms, they have also noticed that the employer total pay for the health insurance rises for around twice in the same period, while in most of the firm during the same period employee gross pay rose just by around 35% and making it difficult for them to survive and has affected their demand pattern in the market which ultimately affect the economy in the long run. mainly increasing health premiums has mainly affected the small scale industries as their revenue is already low and after increase in insurance premium price it affects their balance sheet and ultimately their profit decrease thus now they have less money for innovation, infrastructure development, and R&D which means fewer job in the market and fewer supply of their product due to resource constraint which will ultimately raise the inflation level in the economy and once the cycle of decreasing demand will start it will affect the whole economy, definitely by looking at above arguments we can say decrease in the cost of employer-provided health insurance affect the economy and it can be done by implementing a better policy framework related to health sector.