Business plan for A Health Insurance Company
An Insurance Company is considering moving into the local market of City Y. This is a mid-sized city with population of 250,000 in the city proper and approximately 1.3 M in the Metropolitan Service Areas (MSA). The city has 5 national employer group companies that are based locally. The major insurer right now is a for-profit insurance company that offers the employer groups an indemnity type of health care coverage or called fee for services plan. There are 5 large employer groups range in size from 250, to 5,000 employees. This is a primarily blue-collar city, with some companies having been there for more than 30 years. There are at least 5 major hospitals in the city and MSA, ranging in size from 125 to 700 bed hospitals. At least 1 hospital system is integrated, meaning that the hospital system owns nursing homes, practitioner groups and other smaller hospitals. There are at least 4 fairly large multispecialty group practices made up of primary care practitioners, and specialties such as cardiology, endocrinology, gastroenterology, and dermatology.
We see that the primary insurance company in City Y display an indemnity type of healthcare coverage. This type of health insurance indemnifies the beneficiary from financial costs associated with health care. According to the characteristic of the population called Blue Collar workers, is a working class person who performs non-agricultural manual labour, it is understood the utilization of this type of coverage. Blue collar work is referred to the skilled or unskilled manufacturing, mining, sanitation, custodial work, oil, field work, construction, machinal maintenance, warehousing, firefighting, technical installation and many other types of physical work. Often something is physically being built or maintain.
For establishing a plan and determinate local necessities we need to gather specific information to calculate the insurance score of the community. Insurers usually know essential data about the community or group of people they are interested in selling they services until the individuals or business administer more accurate information.
Principally this company needs to evaluate the potential risks and exposures of this new potential clients by the application of underwriting. In this process, we will gather information about applicants or groups of applicants to determine an adequate, competitive, and equitable rate at which to insure them (Kongstvedt, 2013). The underwriting class and the level of examination and analyzation rely on different factors, including at which timing the process of underwriting is executed, the magnitude of the group that is been scrutinized, if is for a person, small group of people, or large one, and what type of risk represent. Additionally, underwriting has the quality that sometimes is specific to the market pointed. For instance, to implement underwriting in personal and small-scaled groups in most cases requires review of the individual medical records, but in a huge group underwriting does not require this level of depth. The useful technique of underwriting set health status of an individual or group of people, the capability of the premium payment, if the person can handle another coverage and the historical persistency.
As this is a large group from the health status information we only need an employer disclosure listing major health conditions and a medical cost experience. Similarly, large groups commonly present past claims experience, which allows the process of underwriter to be better in estimation for a specific group’s rates.
Moreover, an estimate income and credit history is a relevant material that we can used determinate the capability of the premium payment. However, Insurers are not used to drop someone’s coverage with bad credit. decline coverage to applicants with poor credit histories. In addition, some insurers ask for groups with a weak credit rating to generate a letter of credit rather than deny coverage.
As we know an individual can have more than one insurance so is vital the knowledge of the presence of other coverage. This important determinate which insurer is in charge for the payments of the claims the presence of other coverage should be noted, so that the claim adjudicator can determine which insurer is responsible for payment of claims based on coordination of benefits (COB) rules. Coordination of benefits helps ensure that members covered by more than one plan will receive the benefits they are entitled to while avoiding overpayment by either plan.
Health Care needs of the population of City Y
Need in health care is usually delineated as the ability to benefit. As a company in a new town we must satisfy the needs of the different employees in the community.
A blue-collar worker is a working class person who performs non-agricultural manual labor. Blue-collar work include skilled or unskilled manufacturing, mining, sanitation, custodial work, oil field work, construction, mechanical maintenance, warehousing, firefighting, technical installation and many other types of physical work. Often something is physically being built or maintained. Because of this characteristic listed and the type of work these citizens perform we can say that the health needs of this community are related to the treatment, control, or prevention of a disease that are more common in this group of people. Additionally, the illness, the different types of injuries and the care of a person with these needs. All of this will depend of the type of job the person realized. But basically, their needs are focus on preventive medicine that include access to the basic specialties in medicine. As we know these workers are the ones that maintain the city in movement by transportation, construction and many services experience the worst health.
In addition to the necessity of prevention of diseases, we need to cover the early detection of health conditions and treat them, provide a good quality of life to this population and life expectancy.
Insurance products to the large employer groups in City Y.
Because of the high expectation of injury among blue-collar workers and the type of work these citizens perform daily, the product that should be listed in this insurance mainly should be:
A complete health care plan where they can access to some basic medical services. I propose to offer a Preferred Provider Organization (PPO) plan. Because we are entering a new community and we want to offer flexibility to the population, no restriction and compete with the older insurances in City Y.
We will offer a diversity of options to assist the workers and they can build the correct decisions for their physical and mental health.
Medical, dental, vision and wellness complement themselves to provide and create a fresh and active organization and keep your top workers.
Also, we should offer workers compensation, with this one the worker get paid by this system and cannot win a lawsuit and reduced the liability on the employer. This worker compensation will include all medical expenses, event doe after one year after the injury and covers legal fees and lost-income benefits. Also, another option can be an accident insurance, with this one we cover a widely range of risks that may be caused by an accident.
Additionally, sickness insurance that could cover medical expense and hospitalization benefits as well as fixed-amount benefits in the event of temporary or permanent disability.
Type of rating propose to the employer groups.
After having all this information collected, we will proceed to rate and calculate the premium for the group studied. The premium calculation is accomplished by applying the rate formula, the historical experience, and the other underwriting data. This estimation results in a manual rate that is elaborate with the experience of all individuals like a base rate. This base rate is then arrange for the demographics, the area studied, the group size, type of industry and different features to report the rate specific to the group.
The type of rating that we could implement is the experience rating because normally big group size of individuals is rated in some measure on experience. Experience rating can be thought of as the converse of pooling experience because recognizing a group’s experience in its rate calculation reduces the extent to which groups subsidize each other (Kongstvedt, 2013). Primary, experience rating establish concept that companies should be charged a premium that meticulously reveal their risks.
Experience rating provides a financial incentive for employers to reduce losses, perhaps by implementing a safety program. It also encourages employers to return injured employees to work as soon as possible. For worker’s compensation insurers, experience rating ensures that enough premium is collected to cover the risks being insured (Bonner, 2016).