In “New Gene Tests Pose A Threat to Insurers”  

Pat Reilly had good reason to worry about Alzheimer’s disease: Her mother had it, and she saw firsthand the havoc it could wreak on a family, much of it financial.

So Ms. Reilly, 77, a retired social worker in Ann Arbor, Mich., applied for a long-term care insurance policy. Wary of enrolling people at risk for dementia, the insurance company tested her memory three times before issuing the policy.

But Ms. Reilly knew something the insurer did not: She has inherited the ApoE4 gene, which increases the lifetime risk of developing Alzheimer’s. “I decided I’d best get long-term care insurance,” she said.

An estimated 5.5 million people in the United States have Alzheimer’s disease, and these patients constitute half of all nursing home residents. Yet very few people in the United States have been tested for the ApoE4 gene.

But last month, with the approval of the Food and Drug Administration, the gene testing company 23andMe began offering tests that reveal whether people have the variant, as well as assessing their risks for developing such conditions as Parkinson’s and celiac disease.

Other genetics companies are planning to offer similar tests, and soon millions of people will have a better idea what their medical futures might be. Recent research has found that many, like Ms. Reilly, are likely to begin preparing for the worst.

But for companies selling long-term care insurance, these tests could be a disaster, sending risky patients in search of policies even as those with fewer risks shy away, damaging an already fragile business. “There is a question about whether the industry is in a death spiral anyway,” said Robert Hunter, director of insurance at the Consumer Federation of America. “This could make it worse.”

The tests are simple: All people have to do is send away a saliva sample and pay $199. Their disease risks, if they say they want to know them, will be delivered with a report on ancestry and on how their genes influence such traits as flushing when they drink alcohol or having straight hair.

The company will not reveal how many people have received disease-risk data, but it says that in Britain and Canada, where it has offered such testing for several years, about three-quarters of their customers have asked for it. 23andMe has sold its genetic services to more than two million people worldwide since 2007.

The issue for now is with long-term care insurance, not employment and not — at least so far — health insurance.

Under the Genetic Information Nondiscrimination Act, companies cannot ask employees to take gene tests and cannot use any such results in employment decisions; insurers are not permitted to require gene tests or to use the results in coverage decisions.

But legislation proposed in the House would exempt corporate “wellness” programs from some of these requirements. And the American Health Care Act, passed by the House, would permit states to waive some insurance safeguards regarding pre-existing conditions.

At the moment, companies selling long-term care insurance — unlike medical insurers — are permitted to ask about health status and take future health into consideration when deciding whom to insure and how much to charge.

The 23andMe test results will not appear in people’s medical records, and the company promises not to disclose identifiable findings to third parties. It is up to the customers to reveal them — and the fear for insurers is that many will not.

Two-thirds of nursing home residents are on Medicaid, and the remaining private insurers are already struggling. In the early 2000s, more than 100 firms offered long-term care insurance, according to the Treasury Department. By the end of 2015, only 12 firms offered it, and new enrollees fell from 171,000 to 104,000.

The insurers charged too little for these policies, experts say; policyholders have turned out to be much sicker than anticipated. To pay for an unanticipated increase in policyholders who develop Alzheimer’s, insurers would have to raise prices, said Don Taylor, a professor of public policy at Duke University who has studied the issue.

Increasing numbers of people at low risk might decide the insurance was not worth the rising price. Even many at high risk would eventually find the policies unaffordable. It is the definition of an insurance death spiral.

If that happens, said Mark Rothstein, the director of the bioethics institute at the University of Louisville’s medical school, even more people with Alzheimer’s will end up on Medicaid, with the federal government paying for their nursing home care.

Someone must pay, he said. The only question is whether it will be taxpayers or policyholders. “How do you want to spread the risk?” Mr. Rothstein asked.

For 23andMe, the new tests are simply a way to help people learn about their makeup. “People clearly want information about themselves,” said Anne Wojcicki, the chief executive at 23andMe. “There is a demand.”

Yet even if just a minority of 23andMe customers decided to game the current insurance system, “it’s enough to perturb the market,” said Dr. Robert Cook-Deegan, a professor at the school for the future of innovation in society at Arizona State University, who has studied the issue.

Research by Dr. Robert C. Green, a geneticist at Harvard University, indicates that this is exactly what is likely to happen. Drawing on data from his clinical trials involving more than 1,000 people, Dr. Green has found that people who learn they have the ApoE4 gene fare just as well if they get the results without counseling.

But he also found that those who learned they had the gene variant — Ms. Reilly was one of them — were nearly six times more likely to buy long-term care insurance than those who did not. The ApoE4 gene variant is present in about a quarter of the population.

Many thought there was no need to tell the insurer why they suddenly wanted a policy. “All the insurance companies are concerned about this,” said Dr. Green, who has been discussing the problem with industry executives.

Major insurers declined to comment. A trade group, American Council of Life Insurers, issued an email statement by Mariana Gomez-Vock, the group’s senior counsel.

“Though it is difficult to speculate on the potential impact of the latest 23andMe offering, any situation that has the ability to significantly increase adverse selection could impact the availability and affordability of products over time,” she wrote. “We need to be on the same page with the applicant, where both sides share the same information,” she added.

But will that happen? “I don’t see a good outcome here,” Mr. Taylor said.

1. What do insurers fear people will do if they learn they have the ApoE4 gene?

2. What could we consider this type of behavior?  

3. Has long term care insurance been a profitable line for insurers? Explain and support your answer.  

This is my market plan in Entrepreneurship class.

Please write about for Organization and Operations
-legal structure
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Industry and outlook

The compost industry is on the rise with the 2008 recession behind us and not a lot of manufacturing companies in the compost market allows for less competition. As stated by USCC Executive Director Frank Franciosi “Our record results indicate that the composting industry is growing and interest in expanding it has never been greater,”. Also with the growth of urban gardening and the need for more organic and healthy foods consumers have begun to grow their own fruits and vegetables. This bodes well for our company since we promote organic materials with natural nutrients for soil development and to help grow organic and healthy foods. With consumers leaning more towards organic foods the need for using natural fertilizer has increased and the market has not seen much new competition. To this end our company takes advantage of two critical needs. First using organic materials to increase richness of soil and give better yields of crops. Secondly to reduce and reuse organic waste which helps better our environment and eliminates food waste. Based on the interviews we conducted this is a growing market with a lot of potential for entry and market share.

Now people have a stronger sense of protection of the environment and are aware of the impact of the environment on society and humanity. In agriculture, the most common chemical fertilizer is inorganic fertilizer. The factory produces these fertilizers. Relevant investigations have shown that the utilization rate of chemical fertilizers is low, and the loss rate is high, which not only leads to soil pollution in farmland, but also causes organic infection to water bodies, eutrophication pollution, and even groundwater pollution and air pollution. Our company respects organic fertilizers. Raw materials for making fertilizers are made of natural materials that are readily decomposed. In this way, our products can meet the needs of consumers and protect our environment.

Target Market

Our company targets average consumers and gardeners who both can benefit from our work. The average consumer can be satisfied knowing that the grocery stores they shop at help to minimize food waste by working with us. The gardeners we sell our product to can be content knowing they are using organic materials to help fertilize the soil they use to grow fruits and vegetables within their gardens. Urban gardens or communal gardens where a group of people use a plot of land to grow their crops can also require large amounts of fertilizer. Our main targeting strategy is for consumers who wish to grow organic produce that do not contain any chemical or synthetic materials. We pride ourselves in being environmentally conscious and give an image of “environmentally friendly” towards grocers who work with us. We also saw a lot of enthusiasm with the concept of recycling food waste and creating organic materials to use for soil enrichment most gardeners we spoke to seem to care about Eco-friendly products and being able to be green on both sides of supply and chain appeals to them.

Market Share

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Sports and Leisure. The reality television series Splash! features celebrities attempting to learn how to dive. The first episode aired in January 2013 and earned a 23.6% audience share. That is, 23.6% of all TVs in use during the show time period were tuned to a station airing Splash!. 24 people who watched TV during that time period were selected at random.

(a) Find the probability (±0.0001) that at least six watched Splash! P(X⩾6) = .9600

(b) Find (±0.0001) the expected number of people who watched Splash!. μ = 5.664

(c) Find the probability (±0.0001) that the number of people who watched Splash! is less than the mean. P(X<μ) =

(d) Suppose that at most three people watched Splash!What is the probability (±0.0001) that no one watched Splash! ? P(X=0|X⩽3) =

A. In 2016 were foreign-born workers a bigger share of the U.S. labor force than in 2006? Explain, presenting and interpreting the relevant statistical evidence.

B. In 2016 who exhibited a higher labor force participation rate in the U.S., native- or foreign-born women? How does the evidence for 2016 compare with 2006, before the Great Recession? Present all relevant statistical evidence and interpret.

C. In 2016 who exhibited greater joblessness in the U.S., native- or foreign-born men? How does the evidence for 2016 compare with 2006, before the Great Recession? Present all relevant statistical evidence and interpret.

D. In 2016 who was more likely to have earned a bachelor’s degree or higher in the U.S., foreign- or native-born workers? Present and interpret relevant statistical evidence. Should you be “surprised” by your findings? Explain, using appropriate economic analysis.

Following are the transactions of a new company called Pose-for-Pics.

Prepare general journal entries for the above transactions.

Fill out the IRS required forms and/or schedules for a complete and accurate processable form. On these forms and/or schedules are 203 line entries or boxes that must be checked. These must be made to fill out the forms correctly.

Paul J. and Judy L. Vance are married and file a joint return. Paul is self- employed as a dentist, and Judy is a college professor. Paul and Judy have two children. The oldest is Vince who lives at home. Vince is a law student at the University of Cincinnati and worked part-time during the year, earning $1,500, which he spent for his own support. Paul and Judy provided $6,000 toward Vince’s support. Jennifer is the youngest and lived in the Vance’s home for the entire year. The Vances provide you with the following additional information.

The Vances do not want to contribute to the presidential election campaign.

The Vances live at 621 Franklin Avenue, Cincinnati, OH 45211.

Paul’s birthday is 3/5/1961 and his Social Security number is 333-45-6666.

Judy’s birthday is 4/24/1964 and her Social Security number is 566-77-8888.

Vince’s birthday is 11/6/1996 and his Social Security number is 576-18-7928.

Jennifer’s birthday is 12/12/2009 and her Social Security number is 613-97-8465.

The Vances do not have any foreign bank accounts or trusts.

Judy is a lecturer at Xavier University in Cincinnati, where she earned $30,000. The university withheld federal income tax of $3,375, $1,860 of Social Security tax, and $435 of Medicare tax. She also worked part of the year for Delta Airlines. Delta paid her $10,000 in salary and withheld federal income tax of $1,125, Social Security tax of $620, and Medicare tax of $145.

The Vances received $800 of interest from State Savings Bank on a joint account. They received interest of $1,000 on City of Cincinnati bonds they bought in January with the proceeds of a loan from Third National Bank of Cincinnati. Paul received a dividend of $540 on General Bicycle Corporation stock he owns. Judy received a dividend of $390 on Acme Clothing Corporation stock she owns. Paul and Judy received a dividend of $865 on jointly owned stock in Maple Company. All of the dividends are ordinary dividends.

Paul practices under the name "Paul J. Vance, DDS." His business is located at 645 West Avenue, Cincinnati, OH 45211, and his employer identification number is 01-2222222. Paul’s gross receipts during the year were $111,000. Paul uses the cash method of accounting for his business. Paul’s business expenses are as follows:

Advertising $1,200

Professional dues $490

Professional journals for dentists $360

Contributions to employee pension plans $2,000

Malpractice insurance $3,200

Fine for overbilling State of Ohio for work performed on welfare patients $5,000

Insurance on office contents $720

Interest on money borrowed to refurbish office $600

Accounting services $2,100

Miscellaneous office expense $388

Office rent $12,000

Dental supplies used in dental services for patients $7,672

Utilities and telephone $3,360

Wages $30,000

Payroll taxes $2,400

In June, Paul decided to refurbish his office. This project was completed and the assets placed in service on July 1, 2019. Paul’s expenditures included $8,000 for new office furniture, $6,000 for new dental equipment (seven-year recovery period), and $2,000 for a new computer. Paul elected to compute his cost recovery allowance using MACRS. He did not elect to use §179 immediate expensing and he chose not to claim any bonus depreciation.

Judy’s mother, Sarah, died on July 2, 2018, leaving Judy her entire estate. Included in the estate was Sarah’s residence (325 Oak Street, Cincinnati, OH 45211). Sarah’s basis in the residence was $30,000. The fair market value of the residence on July 2, 2018, was $155,000. The property was distributed to Judy on July 2, 2018. The Vances have held the property and have managed it themselves and they started renting the house to the same tenant starting January 1, 2019.To compute depreciation on the house, the Vances had allocated $15,000 of the property’s basis to the land on which the house is located. The Vances collected rent of $1,000 a month during the months the house was rented during the year.

They incurred the following related expenses during this period:

Property insurance $500

Property taxes $800

Maintenance $465

Depreciation (to be computed by you)

The Vances sold 200 shares of Capp Corporation stock on September 3, 2018, for $42 a share. The Vances received the stock from Paul’s father on June 25, 1980, as an inheritance. Paul’s father originally purchased the stock for $10 per share in 1967. The stock was valued at $14.50 per share on the date of inheritance

Judy is required by Xavier University to visit several high schools in the Cincinnati area to evaluate Xavier University students who are doing their practice teaching. However, she is not reimbursed for the expenses she incurs in doing this. During the spring semester (January through April 2019), she drove her personal automobile 6,800 miles in fulfilling this obligation. Judy drove an additional 6,700 personal miles during 2019. She has been using the car since June 30, 2011. Judy uses the standard mileage method to calculate her car expenses.

Paul and Judy have given you a file containing the following receipts for expenditures during the year:

Prescription medicine and drugs (net of insurance reimbursement) $376

Doctor and hospital bills (net of insurance reimbursement) $2,468

Penalty for underpayment of last year’s state income tax $15

Real estate taxes on personal residence $4,762

Interest on home mortgage (paid to Home State Savings & Loan) $8,250

Interest on credit cards (consumer purchases) $595

Cash contribution to St. Matthew’s church $3,080

Payroll deductions for Judy’s contributions to the United Way $150

Fee for preparation of 2018 tax return paid April 12, 2019, of $500.

The Vances made timely estimated federal income tax payments of $1,700 each quarter during 2019. The Vances made the fourth-quarter payment on December 31, 2019. They would like to receive a refund for any overpayments.

n July 2007, Apple released the iPhone at a price of $599. Only two months later, the company dropped the price by 33% to $399. The early iPhone customers were angry about the sudden drop in price and felt they had overpaid for the product. See the letter below that Steve Jobs wrote to these customers. not surprisingly, members of the news media received the message and shared it with the general public.

INSTRUCTIONS: Write a clear and concise assessment of whether or not you think this is an effective business communication. Provide support for your answer. Organize your response into a clear introduction, body, and conclusion. Use the appropriate format for business writing.

***

Letter from Steve Jobs

To All iPhone Customers:

I have received hundreds of emails from iPhone customers who are upset about Apple dropping the price of the iPhone by $200 two months after it went on sale. After reading every one of these emails, I have some observations and conclusions.

First, I am sure that we are making the correct decision to lower the price of the 8GB iPhone from $599 to $399, and that now is the right time to do it. iPhone is a breakthrough product, and we have the chance to "go for it" this holiday season. iPhone is so far ahead of the competition, and now it will be affordable by even more customers. It benefits both Apple and every iPhone user to get as many new customers as possible in the iPhone "tent." We strongly believe the $399 price will help us do just that this holiday season.

Second, being in technology for 30+ years I can attest to the fact that the technology road is bumpy. There is always change and improvement, and there is always someone who bought a product before a particular cutoff date and misses the new price or the new operating system or the new whatever. This is life in the technology lane. If you always wait for the next price cut or to buy the new improved model, you'll never buy any technology product because there is always something better and less expensive on the horizon. The good news is that if you buy products from companies that support them well, like Apple tries to do, you will receive years of useful and satisfying service from them even as newer models are introduced.

Third, even though we are making the right decision to lower the price of iPhone, and even though the technology road is bumpy, we need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price. Our early customers trusted us, and we must live up to that trust with our actions in moments like these.

Therefore, we have decided to offer every iPhone customer who purchased an iPhone from either Apple or AT&T, and who is not receiving a rebate or any other consideration, a $100 store credit towards the purchase of any product at an Apple Retail Store or the Apple Online Store. Details are still being worked out and will be posted on Apple's website next week. Stay tuned. We want to do the right thing for our valued iPhone customers.

We apologize for disappointing some of you, and we are doing our best to live up to your high expectations of Apple.

Steve Jobs

Apple CEO

1. A company make profits of $22,000 on each of its five low end products $50,000 for each of the two mid end ones and $270,000 from one top product. The number of products contributing less than the mean profit is

a) 4 b) 7 c) 5 d) 6 e) 0

2. Of most of the prices in a large data set are of approximately the same magnitude except for a few observations that are quite a bit larger, how would the mean and median of the data set compare and what shape would a histogram of the data set have?

a) the mean would be equal to the median and the histogram would be symmetrical

b) the mean would be smaller than the median and the histogram would be skewed with a long right tail.

c) the mean would be larger than the median and the histogram would be skewed with a long left tail

d) the mean would be larger than the median and the histogram would be skewed with a long right tail

e) the mean would be smaller than the median and the histogram would be skewed with a long left tail

3. What are the assumptions behind the two pricing strategies and what are their strength and weakness?

4. Suppose a university decides to raise tuition fees to increase the total revenue it receives from students. This strategy will work if the demand for education at the university is..

a) unit elastic b) inversely related to price c) elastic d) inelastic e) perfectly elastic