Economic Issues Simulation Research Paper

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Economic Issues Simulation Paper HCS/440 August 8, 2011 Economic Issues Simulation Paper Health care can be perceived as one of the goods that consumers demand. Economics tells us that rational consumers make choices to maximize utility. Castor Collins Health Plans was founded as a regional health maintenance organization (HMO) in 1999. The health maintenance organization (HMO) provides health insurance and health care services to 100,000 groups and is looking to increase this number. Castor Collins Health Plans Consumers can improve their well being by sacrificing a small premium to insure against the probability of a larger loss. Constructit and E-Editors has approached Castor Collins for health insurance. Constructit has 1,000 employees…show more content…
About 60 percent are married. Thirty-two percent of the people have a work profile that involves great physical activity, while 25 percent have a work profile with moderate physical activity. The remaining 43 percent of the work place is involved in sedentary activities. It is very important to demonstrate how the different policies offered by Castor Collins can enable profits to increase while containing costs and maximizing profits. The higher premiums have to be considered first because it affects the customer pool. Increasing premiums might possibly decrease the customer pool by eliminating customers with better health because younger people wish to pay less. When a group is considering on increasing benefits will also decrease profit margin. The profits per policy are profits equals premium minus the probability of illness times the number of individuals that are ill. Feuerman’s new plan of the Caster Enhanced Minor plan, the probability of illness can be eliminated by taking away the high cost of health care…show more content…
This plan does not cover preexisting conditions, the risks of providing this plan is lower. This groups employees were younger than those for E-Editor and did not have any preexisting conditions. This is why this makes it the best insurance plan for Constructit. The premium that is going to be charged Constructis is $3,428, and Castor Collins earning from Constructit is $3.43 million. Given the health profile and expected utilization of services for this group, increased earnings for Castor Collins could have been better if Constructit had been provided a different plan. I believe that I made the best decision for Constructit and what monies Castor Collins will benefit from issuing this health

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