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23 Feb 2019

How would you set up a cost-benefit analysis of a program to reduce air pollution in a city? Indicate the items you would include as costs and benefits, and discuss the problems encountered in measuring these benefits and costs. Write a report proposing your program to the Mayor and Council. Include in your proposal the Cost-Benefit Analysis Tableau for your proposal.

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Beverley Smith
Beverley SmithLv2
26 Feb 2019

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Excessive and improper use of antibiotics is contributing to the resistance of many diseases to existing antibiotics. Consider a regulatory program in Canada that would monitor antibiotic prescription by physicians. Analysts estimate the direct costs of enforcement to be $50 million, the time costs to doctors and health professionals to be $250 million, and convenience costs to patients to be $190 million annually. The annual benefits of the program are estimated to be $360 million in avoided resistance costs in Canada, $80 million in health benefits from better compliance with prescription, and $300 million in avoided resistance costs in the rest of the world.

With the information above and any additional information you can find and your own reasonable assumptions, undertake a rough cost benefit analysis

1. How will you quantify and monetize all your identified (10)

-Costs

-Benefits

-What time frame will you use and why?

2.With a spreadsheet estimate (30)

-The Present Value Cost – Economic

-The present Value Benefits – Economic

-Discuss any qualitative costs and benefits

3.With the following criteria, determine whether the project is economically feasible (10)

-Net Present Value Criteria

-Benefit Cost Ratio

Unemployment among high school graduates is quite high due to arecession. City Community College is considering a new program tohelp young people get the training they need to be more employable.The college has collaborated with the municipal hospital to build anurse’s aide program, a 1-year program that would lead to immediateemployment. Initial financial analysis indicates that the totalfixed cost of the program will be $200,000, which includes the costof a 1-year rental of the facilities plus utilities, insurance, andadministrative costs. The variable cost and step cost together are$10,000 per student, which pays for faculty salary, studentlunches, and teaching materials and textbooks. The state kicks in$5,000 per student, and the tuition based on market analysis is$6,000. Given that the nurse’s aide program has never been offeredin the region before and will be under financial pressure due tocurrent funding cuts, the college’s board of trustees would like toknow how many students would need to be enrolled for the program tobreak even. The board also wants to know what other options it willhave to mitigate these financial issues if the expected enrollmentis below the break even point, given the high profile of theprogram at a time when employment and economic recovery arecritical.Consider two possibilities: (1) Funding is limited to$100,000, or (2) with the benefit of efficiencies, variable andstep costs can be reduced to $9,500. You are required to do afinancial analysis of the proposed program. Please provide aspreadsheet solution and a written explanation of yourapproach.

You are a small employer who has believed in providing top-notch benefits to your 250 employees for many years. For the last several years you have provided a wide choice of health benefits through a cafeteria plan and made very generous contributions to their cost. Employees could choose between a comprehensive major medical plan and two different PPOs and were required to pay for only 10% of the cost. Everyone received vision coverage at no cost. All employees had their choice between two different dental plans with the employer paying 75% of the premium. Employees could elect to receive long-term care insurance for themselves and their parents and pay for it through a salary reduction plan with pre-tax dollars. As a result of these wonderful benefits, you don’t experience much turnover amongst your employees. However, your costs have been increasing lately at an alarming rate. You realize you must change the way you provide benefits.

You are considering either a core-plus plan or a modular plan. The core-plus plan would provide everyone with health insurance through a point of service plan (POS) at no cost to the employee. Additionally, employees would be given a certain number of benefit credits to apply toward the purchase of vision, dental and/or long-term care insurance that would fund approximately 20% of the costs of the optional benefits. They could contribute toward the remaining cost on a pre-tax basis. The modular plan would offer employees a choice between three plans: Plan L would completely cover the cost for employees to enroll in an HMO for both expenses and dental insurance. Plan M would provide coverage in a POS plan for medical and a modest dental insurance policy, requiring employees to cover 20% of the cost. Plan H would give employees health, dental and vision insurance through a PPO with employees paying 40% of the cost. Again, any costs borne by employees would be set up on a pre-tax basis.

Discuss the following:

a. How will the new plans allow you to control your benefit costs compared with the current arrangement? Be specific.

b. How do you think your employees will react to switching away from their previous cafeteria plan? Explain.

c. Do you think the core-plus plan or modular plan will be better? Justify your selection with specific reasons.

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