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Cost Efective Alternatives to HMOs

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You are the compensation manager for a manufacturing company of about 200 employees. You are responsible for the company's healthcare budget. The company has been spending an increasing amount of money on health insurance every year with no relief in sight. Currently, the company offers one plan, a traditional HMO that employees contribute to every pay day. The CEO wants to know what options are available to decrease the rising costs without sacrificing employee coverage. She does not want to offer less coverage, just pay less for the same thing or better. In a memo to the CEO, briefly summarize some of the options that the company should explore to contain its costs. You will need to clearly explain each option; however, you do not have to provide any calculations as this is just a starting point to examine all potential plans and options to lower and contain costs.

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The response provides you a structured explanation of alternatives of traditional HMO . It also gives you the relevant references.

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TO: CEO
FROM: Compensation Manager.
DATE: 29th January, 2014
SUBJECT: Options for reducing health insurance costs.

I give below some options that can be used to reduce our cost of medical coverage. The coverage will be similar but if the proposed options are selected the costs will go down.

The first option that the company should explore to lower its costs is the health reimbursement arrangement. This is a high-deductible health care plan funded in part or totally by the employer. The health ...

Solution provided by:
Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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