Economic Issues Simulation
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Castor Collins Vice President Mary Mulanax has been asked to come up with a strategy and financial plan for the corporation. The duties she is faced with is setting pricing plans and insurance premiums for companies and their work force. During this time Castor Collins has been approached by two different companies looking to get insurance for their work force. The companies have a set rate for employees and set premium as well since the employees will be paying for their own insurance (College, 2006). The company seeking insurance for their employees are Constructit and E-Editors. Constructit has 1,000 people in their company and E-Editors has 1,600 people within the company. So each company has set premiums, Constructit has a 4,000 dollar max and E-Editors has a 4,500 dollar max. The company I chose to look at is Constructit has to decide between the three plans, which are Castor Standard, Castor Enhanced and Castor Enhanced Minor which is a customized plan. Demographics of Constructit
Looking at the demographics of Constructit consist of 550 men and 450 women, which are between the ages of 26 to 45 (College, 2006). Looking at the duties of the employees for Constuctit can be different according to what part of the plant they are located. So we notice that 32% of the employees are working in an excessive physical department, 25% are working in a less active department and the remaining 43% work in area with no physical activity. With all of these different areas that employees work is subject to injury, because of the where they are located. Those working for Contructit 60% of the employees are married also of all the employees not all are in perfect health. Looking at how many employees are in great health we notice that is 38% which can be broke down by 170 men and 210 women. There is also 10% of the employees smoke, 55 men and 36 women. The rest of
the employees are broken down as follows those with injuries, those that have breathing problems, those who have problems with eating, excessive migraines, and those with allergies (College, 2006). Health Concerns
As Castor Collins was go through their data from the investigation they noticed that the employees of Constructit a lot of health issues. One part of the investigation stated that 39% of the employees are overweight, which consist of 198 men and 192 women. They have showed Constructit that employees that are overweight can cause the employee to have high Cholesterol and can also cause the employee to get high blood pressure. Now we look at the rest of the concern that effect the employees. The employees suffering from allergies consist of 17%, the employees suffering from migraines are 16% and the ones suffering from breathing is 13%. The very last one are those suffering with problems eating or digesting are 8%. The problem of developing a plan for Contructit lies in the hands of Mary, which has to stay in the 4,000 dollar budget. Plans
Mary Mulanax from Castor Collins has come up with two different plans that could fit the employees of Contructit. The first plan that Contructit can look at is Castor Standard, which want cover any preexisting health condition. Second plan that Mary show Contructit is the Castor Enhanced which will cover the employees and all preexisting conditions. Helen one of the team members for Constructit suggest the Castor Enhanced and to eliminate a few of the services with high utilization. Another team member Adam suggest not to choose either of the plans if the risk outweighs the profits. Constructit did not choose the Castor Standard, because it did not cover preexisting conditions. The premium is in the range they were looking for and profits would be higher. The Castor plans which Mary presented does not include the copayment the employee will pay. Here are some examples of the copay employees will have to pay they are 114 dollars for Castor Standard and 144 For Enhanced plan this is for hospital services.
The Standard plan cost for emergency, cost the employee 310 dollars and the Enhanced is 388 dollars. If the employee goes for outpatient services it will cost 56 dollars with the Standard plan and 70 dollars for the Enhanced plan. If the employee has outpatient surgery it will cost the employee 305 dollars with the Standard plan and 381 dollars with the Enhanced plan. When looking at Castor Standard or Castor Enhanced is the expected utilization of services that are provided to Constructit. Looking at Construstit of the average utilization of services they are group by age they are from 26 to 45. The inpatient services are 3% for Standard and 6% for the Enhanced this is an annual rate and for surgery it is 6% for Standard and 8% for Enhanced. The annual utilization for emergences is 6% and is the same for the Standard plan and Enhanced plan is also 6%, but the average is 8%. The utilization in standard is to be expected can be anywhere from 3% to 10%, but overall the annual average is 6% for standard. Plan Choice
The plan that Constructit chose to go with is the Castor Enhanced, which could be modified to stay within the 4000 dollar budget. Constructit chose this plan even though the copay was higher for employees is higher the benefits for the plan are higher. With this plan they can keep the premium below 4,000 dollars, which the Castor Collins got it to 3,943 dollars and made the company nearly a 4 million dollar profit by eliminating the overweight treatment. Even though Castor Enhanced Minor cover preexisting conditions the risk could be low but the earnings are high. The copays for every other service are only at an 8% rate. Conclusion
The task for Mary Mulanax was to evaluate the demographics for Constructit and develop a insurance plan that best fits the needs for the employees of Constructit. The plan that Constructit chose eas the Castor Enhanced, which allowed for the premiums to be under the 4,000 dollar mark. This allowed for the employees to be able to pay the premium and still allow the employees to have good insurance that would cover the needs of the employees. With this plan the utilization is going to 8% and the copays would be higher but the benefits for the employees are higher. The task was in hand was a difficult to deal with, but in the end Constructit chose a plan that best suited the needs of their employees.
College, A. (2006). Understanding Economic Issues for HMOs. Retrieved from www.axiacollege.com