Healthcare Insurance Industry: Studies & Analysis

Introduction

The insurance industry is one of the most observed segments in the financial markets. This notion is supported by several literatures that provide comprehensive discussion about the industry. In addition, the scope covered by the insurance industry is broad. Hence the areas for research are unlimited and robust. Because of the various researches that exist, comparison among studies is expected. Analysts are keen on testing their methods with other studies to determine the validity of their results and recommendations. Literatures are also used to support future studies or to develop previous researches that require changes

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Smith (1983) described the use of quantitative research as the best manner of finding exact facts. The goal of the method of research is to gain universal value. Quantitative research is value free and the use of statistical tools reduces the ambiguities and contradictions that are expected as the research progresses. Popkewitz (1984) explained that qualitative research highlights the researchers’ viewpoint in the process and results. Qualitative research approach can explain the psychological dimensions of humans, which are impossible to represent numerically in the quantitative approach.

There are two researches that will be referenced during the course of the discussion. The first study was written by Cote and Latham (2003) and published in the Journal for Managerial Issues. The research was a case study on the exchange channels between insurers and healthcare providers. The second study was authored by Sky (1998) that was provided through the Journal of Insurance Regulation. The former is considered as a qualitative study while the latter was constructed quantitatively. The similarities and difference between the two studies will be discussed throughout the succeeding sections.

Problem Statement

Healthcare insurance providers mostly fund the first study revolved on the notion that healthcare in the US. Government healthcare institutions forge deals with insurance firms and are selected by patients for their medical coverage. Since there is an established relationship between the two institutions, the authors of the study noted the effectiveness of channels that govern several transactions. The authors observe that inter-governmental transactions can be relational instead of being cooperative. Both insurance firms and the government exert efforts to ensure efficient transaction. This mutual relationship is vital for insurance providers in role of filling up for the financial needs of patients.

The second study was an investigation made by author on the current risk subsidization mechanism used in the State of New Hampshire. The author of the study has recognized the presence of federal and state governments as vital cogs in improving health insurance. The author also equated the policy with the insurance market in the state and the current reforms being pushed in the industry. The author mentioned several existing laws that provide support to the current move for changes in the method of subsidization. Aside from the statutes, other experiences prove to be helpful in the validity of the policies introduced.

There are some notable similarities and differences in the main problems of the studies. Both studies focused on healthcare insurance and the elements that govern the industry. In addition, the studies took notice of the government’s role in facilitating health insurance provisions. The first research, however, was more general in terms of idea. The second research identified as specific issue in insurance that pertains to subsidizations and the provision of benefits to individuals.

Purpose Statement

The main goal of the first study is to critically analyze the efficacy of channels being used by government and insurance firms. The authors have stated that there are there have been problems as to the manner in which insurance and healthcare providers deliver their roles. For instance, the long processes required for both agencies to react lessen the efficiency. Patients have to deal with various documents to ensure that medical bills will be covered. Doctors also complain that time is required for their collections to be accounted and for patients to fully settle their bills.

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The author of the second study listed some of the important changes proposed in the insurance markets of New Hampshire. These include insurance firms to accept all risks and rates to be charged depending on the age. The study was needed because the changes include modifications in the determination of subsidies for insured individuals. There are mechanisms installed to provide collection methods from the state. The author signifies a clear intention to quantitatively analyze the validity of such subsidy strategies and other policies related to insurance.

The studies have both recognized the inequality in the insurance industry and the rampant abuses suffered by patients. The first study mostly dwelled on the delivery of healthcare benefits as provided by insurance companies and the government. The second study attempted to link the current changes in insurance policies to the defects in subsidy determination. Both studies provided the importance of the roles played by the government as regulators and insurance agencies are providers. The purpose of both studies is defined on government-insurance agency interaction. Moreover, the researches presents the crucial roles played by insurance providers.

Assumptions

The first study maintains the importance empirical investigation as basis for future discussions. The study depends mainly on previous literatures that have been published. The hypothesis maintained in the study stated that channeled framework enables creation of models describing the relationship between medical providers and insurance companies. Such framework is important for policy makers to create strategies that will further strengthen the relationship between two parties. The development of this link is critical for patients that are in dire need of quality healthcare coverage.

The second study assumes that the mechanism introduced by the government affect the dynamics of subsidy determination. In addition, the author cites risk mitigation policies the state will have the impossible task of maintaining the continuity and vitality of the insurance market. The study mentioned that several additions are necessary. Such modifications are needed in making the insurance policies timely and sensitive to the needs of individuals. In addition, the subsidy determination becomes more systematized. This is the most critical part that the author attempts to discuss.

In the first research, the authors maintain the value of previous literatures. These write-ups according to the authors are building blocks that will guide the study. The second research, however, deals with the current situation. The assumptions on policies made by the government are crucial in the study. Despite the difference in approach, there is a glaring similarity in both studies. The researches are particular with the policy makers and their role in ensuring better health provision and insurance to individuals. Moreover, the studies seek to propose changes that are designed to improve the insurance industry and insurance firms’ capacity to provide the needed services.

Literature Review

There are several models that were discussed in the study. The most important models involved funding mechanisms such as health maintenance organizations (HMO) and preferred provider organizations (PPO). Several physicians have responded to these models by reducing deals with insurance firms. This practice, however, has caused the doctors to have few patients. Doctors claim their willingness to obtained fewer earnings than to follow the policies of the government. Some doctors state that insurance firms tend to pay slowly affecting the inflow of funds in health providers (Sharpe, 1998).

The author gave a background of the mechanism being proposed by the New Hampshire government. The system, as observed by the author, provides access to wide range of products through high-risk pool. The second part of the mechanism guarantees carrier incentives for correct claims management and adjudication. Processes that include subsidy reimbursements involving carrier’s loss ration have been criticized. Moreover, industry experts have doubted the presence of high-risk pools and other similar tools. These skepticisms are important bases for the author to determine the exact process that can provide accurate calculation of subsidy for health insurance.

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This section of the discussion shows the difference in the focus of the research. The literature providers more description as depicted by the experience of doctors with insurance. The second study focused more on figures, which will be quantitatively analyzed during the course of the research. Moreover, the second study sparingly used literature compared with the first research that was mostly based on previous study. The closest form of similarity is the importance of literature as stressed in both studies. The presence of literary work solidifies the claims made by the authors.

Theoretical Framework

The first study uses the framework as defined in mutual relationship between suppliers and customers. The distribution channels tend to exist in sales and support functions between organizations. Correspondent activities happen in insurance-physician relationship. This is evident in the manner in which insurance firms facilitate the bills payment lessening the burden of doctors. In these channel frameworks, some aspects are dependent of the channel dyads.

The authors relied on the interviews with physicians and insurance providers to determine the dynamics of the study. The changes in the views made by the respondents are critical to the success of the research.

The framework of the second study considers calculation details in the subsidy determination. The actual incurred claims are determined writers through their business. Risk categories are ascertained through age divisions and risk classifications. Aside from the actual determined claims, carriers have to provide information related to the number of patients. Prior to the determination of subsidy, actual claims are changed and modified by replacing actual claim severity with an assured claim severity. Loss ratios are used to limit the determined subsidies and minimum subsidies. These technical aspects constitute the complex approach being used by the author to accurately quantify subsidies.

There is a clear gap as to the framework used in both studies. The first study was more descriptive and pointed at interviews as support for discussions. The second study, however, was more mathematical and made wide use of financial equations. In addition, the second study was based on framework that was derived actual calculations. But it is important to note that both studies are based existing theoretical framework. These frameworks have been used in other researches with different points of view.

Research Design

The study identified 6 insurance providers both HMOs and PPOs. During a three-year period, interviews were conducted with managers and financial officers of these insurance firms. The first part of the interview defined the scope in which the firms operate in relation to healthcare funding. The next interviews focused on the importance of physician-insurance provider relationship. The data from individual patient billing records were gathered. In addition, interviews were administered to secure the validity of the collection schemes. Moreover, secondary data are provided to support the initial information gathered. The secondary information is gathered through desk research.

The design for the second study highlighted critical considerations. The author stated that the subsidy determination procedure is the most important part of the study. Subsidies in particular time frame are based on carriers’ experience on clients. The prospective approach involves indicators from previous years. The retrospective approach includes subsidies that are determined from experience in the current year. In addition, the subsidies are based on the availability of funds. When funds are insufficient, policy makers need to provide contingency measures to prevent problems. Aside from fund insufficiency, the growing risks on insurance are a major consideration for policy makers.

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The design of the first study consisted of series of interviews. The initial stages involved determination of parameters. The in-depth interviews came after rapport was established. The results of the interview will then be analyzed based on the framework provided earlier. As for the second research, the design is purely based on computations. The research is tasked to determine insurance subsidies based on prevailing methods. The use of formulas and theories will be exhibited during the course of the study.

Conclusion

Researchers know the difference between quantitative and qualitative research. The primary aim of qualitative research is to objectively measure the social world, to test hypotheses and to predict and control human behavior. This notion is evident in the first research that was discussed. Quantitative research, however, is an approach that is aimed at the objective determination of facts. The calculations made on subsidy funds are a clear indication that the second research was approached quantitatively. Both studies were approached based on the necessity and circumstances provided.

In terms of difference, the first study revolved around several existing frameworks that govern physician-insurance relationships. To find out which model is effective, the author conducted series of interviews with insurance entities. Meanwhile, the second research makes use of theoretical formulas to determine the insurance subsidies. The author compared the existing methods with the approaches developed in the course of the study.

The first research attempted to validate the existing models. On the other hand, the second author seeks to create a new model. This model is important for government in measuring the needed support for healthcare provision and insurance industry growth.

Commonalities in both researches are also evident. The focus of both research focused on the role of insurance and healthcare. Both studies made mention of government policies as vital in improving the role of insurance firms in healthcare facilitation. In addition, ample literatures were provided to support discussions and conclusions. But the most common aspect observed in both research is the recognition that the insurance industry is vital in healthcare. The relationship of both industries has been emphasized in both studies without affecting the outcome of the researches.

References

Cote, J. and Latham, C., (2003), Journal of Managerial Issues, “Exchanges between healthcare providers and insurers: A case study, Pp. 191-207.

Popkewitz, T. (1984), Paradigm and Ideology in Educational Research, Lewes: Falmer Press, Pp. 12-88.

Sharpe, A., (1998), The Wall Street Journal, “Healthcare: discounted fees cure headaches, some doctors find.

Sky, D., (1998), Journal of Insurance Regulations, “High risk pool alternatives: A case study of New Hampshire’s individual insurance market reforms, Pp. 1-25.

Smith, J.K. (1983). Educational Researcher, “Quantitative Versus Qualitative Research: An Attempt to Clarify the Issue”.

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