Health Insurance Plans in the U.S. Allocation of Resources - Research Paper Example

Health Insurance Plans in the U.S. Allocation of Resources Background The process of resource acquisition and allocation for American health plan insurance remains diverse and vital, viewable from sundry viewpoints, (Reinhardt, 1987). Although ownership of health care system are handled by a number of factions such as, the federal government, private investors and city governments, they are largely operated and owned by the private sector. Amid limited resources, there are variations on how resources are acquired, distributed and used by different health insurance providers. The Blue Cross and the Blue Shield Association (BCBSA) and Aetna are two key American health insurance organizations that provide a range of consumer directed and traditional health care insurance products and services. BCBSA is a federation of up to 39 different health insurance organizations and companies operating within the United States while Aetna Inc is a health insurance company. Aetna.Inc Aetna provides a range of products and services inclusive of pharmaceuticals, dental services, disability plans, group life, medical management and long term care. Aetna receives its financial revenue primarily through Medicare and the employer paid benefits programs and insurance. Aetna (2009) documents that its revenue was $27.6 and $ 31 billion for years 2006 and 2007 respectively, quite a substantial amount. 2008 statistic indicate that largest contributors are medical members followed by dental members, pharmacy members, group insurance members, health care professionals, primary care doctors and specialists and hospitals respectively. Largest amount of expenditure go towards health insurance covers of their members. Other expenditures go towards remunerations of their employees, and miscellaneous expenditures such as lobbying and campaign contributions. In 2008, the company allocated $2.174 billion of its total revenue towards operations with majority of it going towards human capital, acquisition and maintenance of their property and equipment and the maintenance of modern technology, (Aetna, 2009). Owing to a number of legal battles the company faces, it allocates a chunk of its financial revenue to cover its legal affairs. For example, in 2007, it paid $9.5 million fine applied by the New Jersey Department of Banking and Insurance giving the reason that it provided serves to unauthorized network providers. The company has also faced a number of lawsuits from terminated workers, different state’s insurance departments and insurance commissioners. Capital and Human Resources The company has a considerable capital base with total assets and equity at $35.852 and $8.186 billion respectively as at 2008, (Aetna, 2009). It allocates considerable revenue towards its technological improvement and development. With a system serving an estimated 37.3 million people, IT is critical to enable the company make informed decisions in all their operations. In 2007, it received recognitions from a number of organizations across the United States for their technological advancement for example; their website received the “Best Interactive Site” honors in 2007 from the eHealthcare Leadership Awards, an achievement indicative of innovative technology, (Aetna, 2009). As of 2008, Aetna’s employee base was 35,258, a reduction following the laying off of 625 employees in November, 2009. While making the move, the CEO, Ron Williams, cited their need to streamline its work force in order to improve their competitiveness and ‘direct resources to areas with a greater potential for future growth,’ (Aetna, 2009)/ Resources are allocated towards the company’s employee’s health benefits such as life insurance, employee’s savings and retirement. The company also has a variety of programs of paid time for eligible employees who are away from work, (Aetna, 2009). Recruitment and Retention The company has a number of positions inclusive of actuarial, behavioral health, financial services, nursing, information technology, sales and marketing, underwriting and audit. Their recruitment process is open to all qualified individuals, who either apply via their website or the CareerBuilder.com website. Aetna has critically high retention rates, furthermore, although they have laid of 3.5% of their workforce in 2009, it is considered to have one of the highest retention rates among health insurance providers, (Aetna, 2009). Furthermore, as noted in their websites, both regular and temporary employees who quit the company at will and who are considering re-employment may be free to return to the company. The company has also drafted a number of incentives to encourage retention, for example they state that regular employees who work 20 or more hours per week and who opt to return to the company are eligible to maintain any previously earned medical subsidy existent on the rehire date. Aetna retirees receive medical subsidies furthermore employees who defer their retiree health employment are allowed to retain their earned retiree medical subsidies, (Aetna, 2009). BlueCross and BlueShield A federation of 39 different health insurance companies and organizations across the United States, BCBSA directly or indirectly provide health insurance to an estimated 100 million United States residents. BCBSA are franchises that offer a number of programs to benefit their clients, (BCBSA, 2010). BCBSA received a total of $320.5 million in 2008, an amount largely contributed by its members and the Federal government. It is imperative to note that the company has a contract with the federal government and is charged with the responsibility of reviewing and processing the Medicare Claims. In order to effectively coordinate the operation of its independently owned members, BCBSA allocates resources to the organization of up to 60 conferences, (BCBSA, 2010). Similar to Aetna, BCBSA also allocates considerable sums of its financial resources in lobbying for legislature that favor their operations. As an exemplification, Nunes (2003) affirms that at present, the association is lobbying for Congress to make it harder for the American government to hold companies responsible suppose their employees process false claims and defraud the Medicare program. Substantial proportion of its revenue has also been spent towards settling Medicare fraud charges, for example, Nunes (2003) documents that since 1993, an estimated $340 has been channeled to this course. The membership organization offers services to different locally operated companies otherwise known as Blue or Member plans. The organization not only offers different forms of health insurance coverage within every state in the United States, they also act as Medicare’s administrators within certain regions in addition to providing Federal employees with the Federal Employees Health Benefit. Comparative to Aetna, BCBSA has a more diversified management and operational structure, (BCBSA, 2010). The association also coordinates a number of national programs such as Blue Card that enable members of a given franchise to access coverage within other access areas. It further have international operations in countries like District of Columbia, Canada, England, Jamaica, Belgium, Uruguay and Argentina, further offering health insurance products to these countries. Capital, Recruitment and Retention The company allocates considerable revenue towards the attainment of their main objective which is to create innovative solutions for quality, accessible and affordable health care for its subscribers. Being the trade association of 39 independently owned and operated health insurance plans, the company has invested massively in its IT operations for example BCBSA (2010) affirms that it has incorporated a number of management tools, financial and badge management modules and a2zShowEZ that provides a centralized location for members and nonmembers interested in viewing their common exhibitions. 2008 statistic indicate that the federation had an estimated 880 employees handling a number of operations. Its employees include accountants and finance experts, IT planners, Network operatives, Brand marketers and administrators and Quality assurance personnel. BCBSA’s recruitment process is digitized; hence qualified individuals can submit their application one of their 39 companies. BCBS (2010) states that those interested in joining the organization can apply to either of their 39 companies furthermore the company has an elaborate networking and referral strategy through which its employees, members and the general public can refer potential employees. The recruitment process is open although limited with the group’s website affirming that they employ more than 1000 dedicated professionals. Their employees are recruited on the notion that they will provide business strategy, services and consulting expertise and consulting services to its members. In order to ensure retention of their employees, resources that ensure their employees a number of benefits are allocated. According to BCBSA (2010) its employees enjoy; Disability, Retirement Plan, Tuition Reimbursement, Vision, Term and Universal Life, Financial Planning Flexible Spending Account, Credit Union, Employee Assistance program and a number of Fitness programs. They also have access to Real Life Group Related Benefits inclusive of mortgage, home equity loans, auto loans, prepaid legal services, medical discounts and log term care insurance; all of which are incentives and benefits to the company’s employees, (BCBSA, 2010). Analysis Nunes (2003) affirms that there are a number of ethical questions that arise in health care resource allocation. Firs is the distribution of resources, if healthcare resources are scarce how should they be distributed and how distribution choices should be made. Critical is also the issue of fairness and equitability, is the current distribution of resources fair and equitable and if so, are the healthcare resource distribution channels of both Aetna and BCBSA wise and efficient. Allocation issues should correctly be considered in terms of social justice hence resources should be allocated to operations that need those most, (Nunes, 2003). Decision processes and types of actions should reflect appropriate ethical behavior for those in management positions to create ease when dealing with allocation decisions. Prior to allocation of resources, stakeholders must put into considerations clearly defined indicators. The two health insurance providers must also provide truthful and relevant information to the consumers hence they should carry out relevant educational programs to consumers since this will enable them make better healthcare decisions. Recently, there have been increasing concerns over health insurance companies’ transparency in disseminating information and details about healthcare trends, cost, best practices and quality. Both Aetna and BCBSA management personnel must ensure ethical considerations when making important resource allocation decisions Conclusion Conclusively, the rapidly advancing technology, limitations on economic and human resources, the discovery and spread of a number of diseases, diverse values with regard to the rights related to health care and the introduction of new and modification of existent legislature all serve to define the operation of health insurance providers and how they allocate health care resources among consumers. With the US health care expenditure increasing considerably, the method of allocation must be addressed in order to address all the competing goals. As noted by Reinhardt (1987), this would ensure improved quality of life, social stability, social and public good, human dignity and above all, maximize individual freedom and choice. References Reinhardt, U. E. (1987) Resource Allocation in Health Care: The Allocation of Lifestyles To Providers. The Milbank Quarterly, 65(2), 153-176. Nunes, R. (2003) “Evidence-Based Medicine: A New Tool for Resource Allocation?” Department of Bioethics and Medical Ethics, Porto University. Wing, M. D. (1993) Resource Allocation in Health Care: An Example From the United Kingdom. Nursing Administration Quarterly, 17(4) 65-73. Aetna, (2009). Aetna.Inc. Retrieved, April, 8, 2010 from: http://www.aetna.com/index.html BCBSA, (2010) BlueCross Blue Shield Association. Retrieved, April, 8, 2010 from: http://www.bcbs.com/ Read More