History of Veterans Administration
The Veterans Administration in the United States is a government-operated military veteran benefit system and has Cabinet-level status. the veteran’s benefits system traces its root in the seventeenth century when the Pilgrims of Plymouth Colony were fighting with the Pequot Indians. the Pilgrims passed a law that sought to protect citizens who joined the colony army to reinforce their defense against the hostile Pequot Indians. the first laws on pensions Plymouth was enacted in 1936 and provided money to those disabled in course of defending the colony form the Indians (Roche).
in 1776, the Continental Congress encouraged the enlistments and curtail dissertions with the first pension law. it offered half pay for life in instances of loss of limb or other fatal disability that resulted from war. individual states undertook the actual payments for pensions.
The Bureau of Pensions, under the Secretary of War, was administering all veterans programs by 1808. benefits were extended to dependents and survivors of the veterans by subsequent laws that came in force in 1812. By 1816 there were 2,200. Congress raised the allowances for all disabled veterans in this year due to the growing cost of living together with a surplus in the Treasury. In addition, the veteran’s widows and orphans of soldiers begun receiving half-pay pensions for five years.
The 1818 Service Pension Law saw veterans start getting pensions on the basis of need. all persons who had offered service in the War for Independence was regarded in need and would be entitled to a fixed pension for life. officers received $20 every month while enlisted men got $8 a month. By 1820 there were 17,730 pensioners and the cost of pensions had reached $1.4 million.
a new Bureau of Pensions was authorized for establishment by the Congress in 1833. it was a a part of the Department of War up to 1840, from which it under the Navy Secretary as the Office of Pensions until 1849. it was later delegated to the newly found Department of the Interior, and renamed the Bureau of Pensions. the Congress, in 1858, authorized granting of half-pay pensions to widows of veterans and their orphan children until they hit 16 years of age.
A new system of veterans benefits was established in 1917 when the United States joined World War. programs for disability compensation, vocational rehabilitation for the disables, and insurance for service-persons and veterans (Roche). the administration of of the several benefits was under varied Federal agencies: the Veterans Bureau, the National Home for Disabled Volunteer Soldiers, and the Bureau of Pensions of the Interior Department (Dymski & Isenberg).
in 1930, the Veterans Administration was established taking in all the three bureaus. The World War II GI Bill was signed into law in 1944.
In 1958, Confederate soldiers were included in the federal veterans benefits when Congress pardoned Confederate service members plus extended benefits to the lone remaining survivor.
In 1973, the National Cemetery System was transferred from the Department of the Army to the Veterans Administration, where the latter took over the responsibilities of marking of the graves of persons in national and State Cemeteries as well as administering of the State Cemetery Grants Program (Roche).
Microeconomics in the Veterans Administration
There is a lot of microeconomics involved the operations of the Veterans Administration. This affects the products and services acquired and offered. Other factors like consumer behavior, consumer spending, forces of supply and demand as well as the aspect of opportunity cost are also of great consideration in the operations of the Veterans Administration.
Products and services
The Veteran Administration engages in provision of disability compensation, pension, home loans, education, vocational rehabilitation, life insurance, medical benefits, survivors’ benefits, and burial benefits. The VA health care facilities offer a wide range of medical, surgical, as well as rehabilitative care with the greater consideration being given to the microeconomics of engaging in such key functionalities (Dymski & Isenberg). A recent area of focus for the Veteran Administration is to provide avert homelessness for veterans by 2015. much economic considerations had to be taken given the increased demand for injury rehabilitation, nursing home beds, and mental health care. The VA does this by grouping the veterans into eight priority groups as well as several additional subgroups on the basis of such factors as service-related disabilities, and a person’s income and assets. Those highly affected receive care and service free of charge while the others have to make co-payments.
Supply and Demand
The general theory of supply and demand often holds the assumption that markets are usually perfectly competitive. As there there are often many buyers and sellers in the market where neither of them has the power to significantly influence the prices of goods and services. The Veteran Administration is no exception to this assumption. It is fair to say that the market is competitive because many individual states have their veteran administration thus serving as many product/service providers (sellers). Similarly, the number of veterans and active military officers in the various states is fairly large forming the required many buyers or product/service users. The Veteran Administration often employs mainstream economics where resource allocation is carried out on the basis of profitability to all and not directly profitable for anyone to finance. As such it operates on policies that avoid waste through government control. Alternatively, regulations that induce market participants to act consistently to optimal welfare. However, the relationship[ between price and quantity demanded given all the other constraints and goods, the common set of choices of the Veteran Administration is often one that leaves the beneficiaries or consumer happiest.
The VA offer the veterans of the United States armed forces a variety of services, whose eligibilty is often on the basis of discharge from active military service under other than dishonorable circumstances. However, many of the benefits receive service during wartime. The economics of the benefits and services afforded to both the veterans and currently serving members of the military are considered thoroughly by the Veteran Administration so as to have quality and sustenance of the services.
Consumer behavior
The correlation between microeconomics and consumer behavior is present in Veterans Administration. This is because the operations of the Veterans Administration plays along the consumer behavior theory explaining the relationships between consumer demand and changes in price.
Consumer behavior has much to do with utility, which is the level of satisfaction drawn from the consumption of products and services (Sexton). The veterans Administration use the two common means of measuring utility – cardinal and ordinal approach. The Veterans Administration is also always obedient to the assumptions of the utility theory relating to consumer behavior such as consumere are rational and usually prefer more quantity and are ready to make tradeoffs.
Consumer spending
Consumption spending is the biggest part of effective demand or aggregate demand. Just like all other groups of consumers, consumer spending of veterans depends on the manner in which tax policies are implemented. The consumers strive to maintain a consistent flow in their spending, avoiding drastic changes in their general spending. The levels or habits of spending usually remain unchanged unless their income are changed permanently. As such temporary tax changes lead to minimal change in consumer spending except for lower income consumer groups which tend to spend temporary cuts in taxes as fast as they would permanent ones.
Opportunity cost
Opportunity cost of goods or service refers to the best next option foregone. It is a principle that applies to all decisions as its effect is universal and very real. The bulk of the products the Veterans Administration purchases on regular basis often vary a little in price. Generally, the market prices or range of prices are determined through the interaction of demand and supply forces present (Sexton). This forces or factors include sufficiently large number of both buyers and sellers, a similar product across sellers, and knowledge of buyers about the products.
Products purchased and services sourced or offered by the Veterans Administration are made on the basis of the alternative with the greatest value to the consumer (Feldstein). The opting of the product or service that has the greatest value to the consumer and the resultant benefit (in dollars) is what is known as the opportunity cost of the product or service. As such, opportunity cost is gold standard that the Veterans Administration employs in defining costs from an economics perspective.
However, opportunity cost in health care offered to the veterans and their dependents is almost difficult to estimate. As such focus is put on the accounting costs or charges involved in the health care provision. The accounting cost here (also known as production cost) is in reference to the combined values of resources that the Veteran Administration uses to produce or acquire the health products required (Feldstein). On the other hand, the charge in this respect refers to the amount stated in invoices or bills produced or obtained by Veteran Administration in relation to health care.
Target audience
The Veterans Administration has a diversified pool of target audience for its products and services. These include veterans and their families, collegues, all Veteran Administration staff, friends, family, and community partners and organizations, and other non-VA patients. However the service and products available vary from group to group with first priority given to eligible beneficiaries in the Veteran Administration program (Office of Management and Budget). The budget is structured in a way that it meets the need of all in the best manner possible.
References:
Roche, D. John. (2007). The veteran’s PTSD handbook: how to file and collect on claims for post-traumatic stress disorder. Virginia, Potomac Books.
Sexton, L. Robert. (2010). Exploring Microeconomics. Connecticut, Cengage Learning.
Feldstein, J. Paul. (2011). Health Care Economics. Connecticut, Cengage Learning.
Office of Management and Budget (U.S.). (2011). Appendix, Budget of the United States Government, Fiscal Year 2012. Washington D.C., Government Printing Office.
Dymski, Gary, & Isenberg, Dorene. (2002). Seeking shelter on the Pacific Rim: financial globalization, social change, and the housing market. New York, M.E. Sharpe.
