Define (rate), on the basis of which

Define
what your company does.

Independence Blue Cross (IBC) is an
insurance company based in Philadelphia. IBC is the largest health insurer in
the Philadelphia area, serving more than two million people in the region and
seven million nationwide. The main goal of our work is to take care of every
insured person so that every client receives high-quality medical services, and
if necessary, can rely on help in protecting his or her rights.

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Does
competition reduce costs?

The answer to this question in the
insurance field is “it depends”. Competition in the insurance market
is a direct impetus for the formation and development of this field (the
opening of an insurance company, an increase in the number of services
initially provided and work on their quality). The insurance market today is
simply unthinkable without competition.

There are two types of competition
in the insurance industry:

·     
Price
competition — is based on a special tariff (rate), on the basis of which
contracts are signed. This type of competition applies to smaller and more
vulnerable insurance companies that are unable to “hold its own” in
fair competition.

·     
Non-price
competition in insurance – is based not on rate, but on special services (for
example, free consulting services, pre-negotiated in-network rates, etc.). The
main tool of this type of competition is advertising. It’s created to attract
new customers.

What
is the impact of regulatory pressures?

A lot of importance is attached to
regulating the medical insurance market. Its primary task is to ensure that the
insurers fulfill their obligations under insurance contracts. The assignment of
such a task to the state is explained by the specifics of insurance.

Insurance is a rather complicated
service. It is very difficult for a potential consumer to comprehend fully due
to the lack of special knowledge. At the same time, the insurers are
professionals and can abuse their knowledge.

One of the features of the
insurance service is a very significant gap in time between the timing of
payment of insurance premiums and the performance of obligations by insurers
(the so-called inversion of the production cycle). Thus, one of the main tasks
of the state is to ensure the reliability of the insurers.

Regulation of insurance companies
is carried out, as a rule, with the help of specially created state insurance
supervision organizations. The US has a joint federal and state system for
regulating insurance.

Obamacare and introduction of the
Insurance Marketplace probably warrant a separate research paper, but these
regulatory changes did affect the industry in major ways.

How
is labor divided?

With more than 7,000 people
employed, IBC offers a wide range of health plans, including managed care,
traditional insurance, Medicare, and Medicaid. The network of health care
providers includes nearly 160 local hospitals and more than 42,000 doctors and
other health professionals.

What
is the growth of executive pay?

IBC is a private not-for-profit
organization, so it’s harder to get this information. However, the Pennsylvania
Insurance Department released a report on the executive compensation of
the  Independence Blue Cross. Essentially
the department found that Daniel Hilferty (CEO) is reasonably compensated
within the milieu of other Blue plans nationally and in comparison with what is
paid to top executives in nonprofit hospital systems.

However, IBC CEO’s compensation
actually more than tripled in the last 10 years from $916,406 to $3,191,167

Explain
your company’s productivity, efficiency, and output?

???

Explain
your company’s pricing, production policies and the effect on the bottom line.

As you probably know, medical
insurance premiums rise every year. The cost of medical care can increase with
the age and lifestyle choices. The rise of prescription drugs costs can also
affect the insurance rates. Another factor is the increased use of medical
services: people who for the first time receive health insurance through the
Affordable Care Act might more medical needs, so their health care could be
more expensive.

However, the rise in rates leads to
drops in membership rates or reduced coverage. This negatively affects the
company’s bottom line. In the last several years, IBC recorded financial
losses.

What
are the trends in your industry?

It’s no secret that in the United
States of America, health care is very high-quality and high-tech, but at the
same time very expensive. Not every American is able to pay for full-cost
treatment without significant damage to the family budget, especially if it is
a case of a serious or chronic illness.

The health insurance marketplace is
a new way to help citizens find an insurance company and an insurance plan that
meets specific needs and budget.

Many health plans report losses in
the exchange business and are concerned about the future of the Individual
Business on public exchanges. Companies are still closely monitoring the
viability of this business in 2018 to determine their course of action.

At the same time, health insurers
continue to innovate, diversify and adapt. Health plans, large and small,
continue to work to strengthen their positions and use new business
opportunities in the light of competitive shifts and changes in policy.

Explain
the information technology externalities.

Insurance companies need to roll out
more digital tools that will be easier to navigate and understand insurance
products that are being offered. The new generation of consumers appreciates
the speed, efficiency, and convenience, so the choice of the product and the
company is also determined by how much time it takes to visit the office and
how convenient the online transaction is. IT has become a component of the
product, because, in addition to the insurance component, the client is also
interested in the convenience of full understanding of buying the medical
policy and understanding the available coverages, limitations, and options.

I work for a traditional insurance
company and feel that the whole insurance industry is on the verge of the
digital transformation. Last year, the share of purely digital transactions
began to grow and accounted for a significant portion of the sales. Online
business finally stood out as an independent sales channel, and insurance
companies responded by creating special business units with the goal of development
and promotion of online products.

Is
there a global experience? How has it impacted the company?

As more people start to live, work,
and travel internationally, IBC is adapting to cater to this segment as well.

There are several plans that provide access to quality care abroad. They
provide access to a worldwide community of English-speaking, Western-trained
physicians, and 24/7 concierge-level assistance.

Three
year projected new product lines.

In the next three years IBC is
projecting these areas of growth:

·     
PPO
tiered provider network options that create incentive to use preferred
facilities and ambulatory surgical centers;

·     
Cost-effective
alternatives to the hospital when seeking care for services like preventive
colonoscopy, radiology, and lab work;

·     
Value
Formulary, a comprehensive list of medications that include generics, brands,
and specialty drugs based on medical effectiveness, positive results, and
value.

Three
year projected new business development?

Overall there’s a sharp
acceleration of changes of all kinds: technology, business and market
requirements. We have a large number of structures involved in the creation of
new products: marketing, product logistics, underwriters, lawyers, business
analysts, IT. Every time we need to take a new insurance product to market, we
create a complex process that iteratively goes through a review of each
department. The business development will focus on growing our digital
capabilities and using them to engage new and existing members.

Summarize in a few paragraphs your
opinion as to your company’s ability to withstand the current economic turmoil.

Like many other health insurers,
IBC., had a rough few years, thanks to Affordable Care Act growing pains and
reported a net loss of around $50 million in each of the last three years. Some
health insurers have said they are thinking about walking away from the
Affordable Care Act. IBC’s strategy is to stay committed to the reform.

I believe that IBC will be able to
weather the storm and stay afloat in the current environment. In my opinion,
Independence can do it by focusing on the new models of care, early
intervention, and negotiating contracts with hospitals and other healthcare
providers.