Health care is the most important and basic commodity in which an individual needs. Therefore, in order to maximize utility one has to be rational when making a choice. Managed companies’ specializes in the supply of both health care and health insurance. This enables them to both incur costs when it provides the health care service and also earn revenue on provision of health insurance. This goes along way in ensuring that the firm maximizes its profit in order to achieve the long-run goal. The analysis will put into consideration the simulation of Castor Collins Health plans which will be based on the health maintenance organization (HMO).
Castor Collins Health Plans was originally founded in 1999. It was taken to be the regional HMO in Pantome state. The major services provided by the Health care to its enrollees are the health care and health insurance cover. The hospitals and physicians for the health care are located all over in all the parts of the state and the remuneration of the health providers is done with the help of capitation model due to the high population. The company has 100,000 enrollees who are situated in the whole of the Pantome state. The company is planning to increase the number of enrollees in the near future.
The company has been approached by two companies and of the two it has selected Constructlt in the provision of the health insurance. E-Editors group has a population of 1000 individuals. The company does not possess the employer insurance and therefore each individual will have to pay his own insurance cover. The group is willing to pay a premium of $4000 annually per individual. Castor Collins Health Plans bases its selection on risk minimization, in order to maximize the profit. The high risk involved will be determined by the amount of premium one is willing to pay and also the number of individuals who are applying for that insurance cover. In this case therefore the group which will provide the lowest risk is Constructlt group.
Health care risk factors
The health care risk factors to be considered when offering the Constructlt group insurance cover is by the analysis of the number of individuals and also the amount of premium paid. In group coverage, the “law of large numbers” is applicable. Here the healthy individuals can easily offset those who are in dire need of insurance cover frequently. This helps in minimizing of the risk. The insurance company will maximize its revenue and therefore making profit in the long-run.
The company has selected Castor standard plan which suits the Constructlt group. The plan does not provide for the cover of the preexisting medical conditions and therefore this minimizes the chances of the company accumulating the risk facing the group. This plan will ensure that the company not only minimizes the current costs but also ensures maximum revenue is collected during the insurance cover period. The plan incorporates various services to be deployed to the individuals and the copayment rates in which they are required to pay their premiums. The plan takes into consideration the prevailing market value of the various medication and uses the rates availed in order to realize the maximum revenue when the risk materializes. The company also faces the uncertainty of the events to be undertaken by the group which will pose high risk to the Constructlt group.
Castor Standard Plan
In the year 2007 various services were incorporated into the plan in order to ensure the efficient and wholeness insurance coverage of the group. This was facilitated by the ever changing health condition in the world and the culminating if various ailments. The Castor standard plan had to put into plan the coverage against the preventive measures undertaken by the group in order to mitigate a given ailment. The premium was set at a copayment rate of 8% which the based on the current market cost derived from that service. The other services incorporated in the plan prior to that period included diagnosis and emergency dental services. The Constructlt group is supposed to meet the copayment rate of 8% on each of the two services that the plan took into consideration. These three changes incorporated to the plan had to sufficiently meet the dire needs of the group as they had diversified their undertakings over the last one year.
In the following year, 2008 January, Castor Collins Health Plan had a number of suggested undertakings to add to its Standard plan. The inherent and ever con-current ailments have been in the market over the previous years. The major services included in the plan are; kidney dialysis which has been rampant in most of the parts of the state, acupuncture and Gastric Bypass. These ailments had claimed the lives of many individuals in the State and therefore the company had to put into consideration the insurance coverage of such ailments in the Constructlt group. The Standard plan allows the setting of the copayment premiums on these services incorporated to the pan depending on the extensive nature of its effects. The premium of kidney dialysis, acupuncture and Gastric bypass paid to the Health Plan varies depending on its severity and the frequency of occurrence.
Castor Collins Health Plan did not choose the Castor Enhanced plan to be used in the provision of coverage to the Constructlt group. This was facilitated by the argument that the plan incorporated the preexisting conditions of the group. This therefore makes the company providing the cover to be highly risk of the events in which the covered group had initially undertaken. The incentives that the company was willing to get from such undertakings will be non-achievable. For an insurance company to realize its maximum revenue it has to offer coverage for only the existing conditions rather than involving in the conditions that had earlier on prevailed.
The plan undertaken by the Castor Collins Health Plan was both beneficial to the organization and the Constructlt group. The Health Plan can maximize on its revenues and at the same time minimize the cost outlay by reducing the risks involved. The Constructlt group is able to get the coverage on the ever changing Health environment. Of the consequential importance to the group is the minimal copayment rates in which they pay to the Plan.
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