Download Economic Issues Simulation: Constructit

Economic Issues Simulation
Economic Issues Simulation: Constructit
Constructit is a company which does not presently have any employees with health
insurance benefits. The company employs 1000 people and are willing to fund annual premiums
as long as they can pay $4,000 per person. The employees comprise of 550 men and 450 women,
ranging in ages 26 to 45. Furthermore, 57% of the workers range from high activity to moderate
activity while the 43% that remain are in predominately sedentary positions. The employer must
calculate what kind of risks the employees will face when considering what type of insurance to
offer the employees. In this scenario, 38% of the employees are not at any major risk whatsoever.
Although, nearly 18% if the employees are smokers and 13.50% of the group suffer from a
respitarey disease or illness. Another significant risk factor is obesity. Obesity is a disease that
affects 39% of the workers and these employees are also at risk for illness and diseases linked to
obesity. The related diseases include heart disease, hypertension, hyperlipidemia, and diabetes.
Furthermore, the use of health care services increase as well through prescription medications,
diagnostic imaging/services, and outpatient office visits.
Castor Collins offers various different insurance plans which can be used to meet the needs
of Constructit. The first plan is referred to as the Castor standard plan. The Castor standard plan
does not provide coverage for individuals with pre-existing medical conditions. Consequently,
Constructit has a low margin of pre-existing medical conditions so the plan would work out in
their favor. The estimated premium for this plan would be $3,428, which is slightly lower than
the amount they offered to pay.
The second option for the company is the Castor Enhanced plan. This plan is almost
identical to the standard plan, with the exception that it covers pre-existing medical conditions.
This plan would also be beneficial to Constructit because it maximizes their earnings while
limiting the risks. In particular, the plan would apply to all the employees regardless of
respiratory conditions or obesity related diseases. There is additional cost for individuals with
pre-existing medical conditions; however, the individuals with a clean bill of health would have a
slightly less premium to pay. The good and the bad offset resulting in a premium slightly higher
than the estimated budget at $4,428. The company can potentially make this work if they have
the individuals with pre-existing medical conditions pay a lightly higher premium than those with
a clean bill of health.
The third option is Castor Enhanced Minor. This plan is similar to Castor Enhanced
because it allows individuals with a pre-existing medical condition to apply. However, it has the
benefit of removing services inside the plan in order to reduce the costs. This plan would be
beneficial for Constructit because the plans can be adjusted so they are less than the $4,000
promised. Although the plans are adjusted, they still cover all the required services such as
male/female sterilization, custodial care, and vision/hearing screenings.
I personally feel that the best option for Constructit and Castor Collins is to invest in the
Castor Enhanced Minor plan. This plan provides all the services necessary and it applicable to
everyone regardless of pre-existing medical conditions. In addition, the plan is less of a risk
compared to the Castor Enhanced plan because it can be altered to benefit each individual. For
example, the plan would be beneficial to Castor Collins because it allows him remove the obesity
treatment services from the plan. The 39% of his employees that have issues with obesity can
simply keep the obesity treatment service in their premium. The end result for Castor Collins is
saving money because the people which do not suffer from obesity will need a lesser premium in
cost. In addition, I would also include substance abuse treatment in the plan. The history of the
group states that the utilization of this service would be relatively low because there is only 18%
of the employees which smoke or drink excessively. I would also suggest to include the vision
screening, hearing screening, and the male/female sterilization services. The cost for these
services is relatively low and they are standard services which should be included in any
insurance plan. Eliminating these standard services would deter employees from getting involved
with the insurance plan as a whole so the company would suffer. Custodial coverage should be
another service included with the plan. This additional service is not high cost and the amount of
utilization is relatively low. Deciding on this plan while including vision and hearing screenings,
male/female sterilization, and custodial care; and removing obesity treatment services, would
result in the premium costing approximately $3,943. The total number is just slightly under the
budget of $4,000. The use of this plan will make Castor Hall up to $3.94 million from
Constructit. At the risk of redundancy, this would be a very profitable choice for Castor Hall.
I personally would not select Castor Standard insurance because it limits the employees that
are applicable for that coverage. This particular plan does not include individuals with preexisting conditions and other employees with issues with obesity. Furthermore, the fact that 39%
of the group has obesity issues, there is a real possibility that there are pre-existing medical
conditions inside that group. The Castor Enhanced plan is not beneficial because each premium
cannot be altered to match the needs of the individual. Furthermore, considering all the services
included in the plan, the amount Constructit is willing to pay for a premium is not profitable for
Castor Hall. The high utilization of these services would overwhelm the money made from
annual premiums.
In conclusion, economic decisions made in the healthcare market are very complex and
subjective. The options offer endless uncertainties which influence the process. Considering
supply and demand, the concept is difficult to decipher because a patient cannot determine when
he/she will need medical attention. To make matters worse, a patient cannot determine how much
treatment or medicine is needed to make them healthy. A company like Castor Hall must
acknowledge the needs of the entire group and decide what plans are the most appropriate for the
individual as well as the company. Its important for Castor Hall to make sure the company is
happy with the services offered. However, Castor Hall must also make sure that the company is
satisfied financially with the services offered. Its great for the services to be beneficial but if they
go over the companies’ budget than its not beneficial at all. The competition of the healthcare
system is so intense that one mistake can lead to the loss of millions of dollars.
References
University of Phoenix. (2010). Understanding Economic Issues for HMO's [Computer Software].
Retrieved on May 20, 2011, from University of Phoenix Simulation, HCS/440Economics the Financing of Healthcare course website.