Economic Issues Simulation Paper

Understanding Economic Issues Worksheet

This simulation looks at providing health care insurance coverage from the standpoint of a health maintenance organization (HMO). As HMO executives, your obligation is to provide health care for the members you insure. You must do this with a high degree of quality at a price that covers services rendered. To do this, you must offer only those services you may provide at the cost the customer can pay.

In this simulation, you are presented with two potential customers: Constructit and E-editors. Each company is willing to pay a different premium for insurance coverage, and each company has a unique employee profile for health care risks. Your job is to determine what health care plan would best provide services and cover costs. Remember, at the end of the simulation, you may decide to deny coverage to either or both companies.

Answer the following questions about the insurance coverage and the health care profile. Then, determine what coverage is best for each company.

Health Plans Offered	Castor Standard	Castor Enhanced
List the major difference of each plan.

A third plan called Castor Enhanced Minor is also available. What is the major feature that makes this plan different from the two listed above?

Complete the following chart about the two customers seeking health care coverage.

	Constructit	E-editor
Premium willing to pay	$4,000	$4,500
Three major demographic features of employees
% of population with major health risks

Review the demographics and the risk factors of the employees at each facility. The following chart shows services covered by Castor Insurance. Based on the demographics and risk factors, would you expect the employees to be high or low users of each service listed?

Service Provided	Constructit	E-editor
Inpatient hospital
Inpatient surgery
Emergency department
Inpatient mental health
Maternity care
Male/female sterilization
Skilled nursing care
Obesity care
Physician office visits
Hearing/vision screening
Immunizations
Ambulance services
Outpatient mental health
Diabetes care
Pre- and post-natal care
Prescription medications

As Castor Insurance, what plan would you choose for Constructit?

As Castor Insurance, list three reasons you have selected this plan.

1.

2.

3.

As Castor Insurance, if you were going to sell Constructit the customized Castor Enhanced Minor plan, what two services listed above would you eliminate? (Remember, as the insurance company, you want to eliminate what would be the most costly for you.)

1.

2.

As Castor Insurance, what plan would you select for E-editor?

As Castor Insurance, list three reasons you have selected this plan.

1.

2.

3.

As Castor Insurance, if you were going to sell E-editor the customized Castor Enhanced Minor plan, what two services listed above would you eliminate. (Remember, as the insurance company, you want to eliminate what would be the most costly for you.)

1.

2.

If you have selected not to cover either or both customers, provide three reasons you have made that choice.

1.

2.

3.