Running Header: Terms Comparison Paper.
University of Phoenix
HCS/552 Health Care Economics
April 6, 2009
According to Robert Carroll, (2007) health care costs continue to rise in the United States. The growth of health care costs has been exceeding the GDP growth by two percentage points annually since 1940. These rising costs impose a substantial burden on the U.S. economy. Higher spending on public programs like Medicaid and Medicare strains state and federal budgets. Higher insurance premiums pose a challenge for employees and burden workers with higher health costs and lower wage increases.
“The burden of rising health care costs is particularly problematic for small businesses, which tend to have much smaller pools of workers to spread risk and increasingly choose not to offer any health insurance to employees.” (Carroll, R. 2007).
This paper will compare three terms risk, resources and cost, to economics and health care.
Risk management is the discipline of identifying, monitoring and limiting risks. In some cases the acceptable risk may be near zero. Risks can come from accidents, natural causes and disasters as well as deliberate attacks from an adversary. (Wikipedia.org, retrieved 4/6/09)
In business, risk management entails organized activity to manage uncertainty and threats and involves people following procedures and using tools in order to ensure conformance with risk management policies. (Wikipedia.org, retrieved 4/6/09)
In ideal risk management, a prioritization process is followed whereby the risks with the greatest loss and the greatest probability of occurring are handled first, and risks with lower probability of occurrence and lower loss are handled in descending order. Intangible risk management identifies a new type of a risk that has a 100% probability of occurring but is ignored by the organization due to a lack of identification ability. These risks directly reduce the productivity of knowledge workers, decrease cost effectiveness, profitability, service, quality, reputation, brand value, and earnings quality. Intangible risk management allows risk management to create immediate value from the identification and reduction of risks that reduce productivity. (Wikipedia.org, retrieved 4/6/09)
In health care risks are associated with the expected value of all losses averaged over all people. According to Getzen, T. E., (2007) from the individual perspective, insurance is a trade between two possible states of the universe: one in which the person has a heart attack and one in which he or she does not. Money is shifted from the state in which individuals have more (when they are healthy) to the state in which they have less (when they are sick), similar to the ay savings shifts money from good periods to pay for the bad periods. From a societal perspective, insurance is a method of pooling risks so that the burden of financial loss is disturbed over many people.
“A resource is any physical or virtual entity of limited availability, or anything used to help one earn a living. In most cases, commercial or even ethic factors require resource allocation through resource management.” (Wikipedia.org, retrieved 4/6/09)
Resources have three main characteristics: utility, quantity, (often in terms of availability), and use in producing other resources. The quality of a resource refers to the total amount of a given raw material, rather than reserve which is an economic term. There are different types of resources; natural and human. Natural resources are derived from the environment. Many of them are essential for our survival while others are used for satisfying our wants. Human beings are also considered to be resources because they have the ability to change raw materials into valuable resources. According to Wikipedia, (2009) the term Human resources can also be defined as the skills,...