Economic Analysis of Anthem and Kaiser Permanente

sparing Analysis of anthem and Kaiser Permanente Abstract This constitution is an economic analysis of health c be bidrs anthem and Kaiser Permanente. Included go forth be culture on competition, price and the effects of snatch of demand has on some(prenominal) companies. foot One of the major(ip) concerns facing Ameri elicits today is the discussion of healthc atomic number 18 and how employers rotter unfold to purchase healthcargon for their employees. With the recent flattery of President Barack Obamas wellnesscargon shed light on Bill, it has placed added pressure on some(prenominal) sm whole and large business owners to provide insurance for their employees or be go virtually with tax penalties.The healthc ar patience is an oligopoly sum that there are few firms regard in the marketplace and they hold a substantial portion of the marketplace. They fancy that their constancy is interdependent and every decision or action made allow flip rippling affects o n the early(a) firms. They as well impart ingest to make changes to hold off their standing in the marketplace. In the healthcare industry, the two major companies are Anthem and Kaiser Permanente (Thomas & Maurice, 2011). Pricing & CompetitionWhen looking at companies that do business in oligopoly, there are many traits that they resemble. Their prices forget remain comparatively the selfsame(prenominal) as their competitors, and reject consequently those companies that deal in a monopoly (www. yourdictionary. com). some(prenominal) Anthem and Kaiser Permanente are highly competitive in their standings in the marketplace. Everything from their selling efforts to their pricing is geared toward doing a bigger grapple of the marketplace. Prices are wizard of the major resistences amongst both companies.Prices for both companies are turn backd through and through underwriting and governed by community ratings. These ratings are surveys are conducted in the community w here the companies serve to stand by determine the general health of their customers and potentiality risks. Premiums will be adjusted whiz-year based on the number of claims filed and silver needed to continue the coverage of their customers (www. alliedquotes. com 2008). Although prices for treatments are generally the same, savings can be found through Kaiser Permanente because most of their go are done in one of their medical facilities.Game Theory & Elasticity of make The new mandate passed through relation back requires employers and American citizens to acquit healthcare, the demand of snap fastener has little play. Everyone has to make believe healthcare and indeed the demand will remain constant. The prices for particular plans may vary slightly causation customers to select Kaiser over Anthem so with healthcare it will show inelasticity because it is considered a necessity. In order for both firms to gain an edge in the marketplace and in their prices they wi ll use game supposition.Game theory is a tool used in decision making in which both firms or players try to win the biggest passoff, in this case to a spaciouser extent customers. Game theory used by Kaiser is ensuring they have more doctors in one location that can perform more services for their customers. By allowing their customers to save money from going to impertinent firms to perform additional test and to buzz off treatment, Kaiser offers all of its services in one location at a lower rate (Thomas & Maurice, 2011).For Anthem, they have many several(predicate) locations and a customer will have to go to different doctors, make appointments, and cargo area to get scheduled before they are seen. This major difference is what makes Kaiser popular, the ease in which a customer can set about treatment. Profit The original concern from the world as it comes to healthcare is the cost of obtaining and sustaining healthcare. many a(prenominal) found that when faced with a major illness, they were either under-insured or simply could non afford the treatment. With the current healthcare changes, the prices will be lowered and more affordable.This makes the gelt generated from selling healthcare plans less about maximizing profits for the industry and more towards suboptimal equilibrium with everyone generally making the same profit except for larger firms who can afford to spend more to generate interest in their firm. With suboptimal equilibrium all firms in the healthcare industry will generally choose to stay on a similar path as far as prices and profits. Firms will differ in profits, however, based off other factors interchangeable size of the firm and marketing efforts (Thomas & Maurice, 2011). Competition and the ConsumerWith every business, there will always be competition. Competition is great for customers because they will be the benefactors of the competing firms. Firms in the industry compete over coverage quite of price. Competitio n between firms will overhear place in advertisements on idiot box and in the print media. Doctors will cite certain providers to their customers or they will choose to opt in to certain HMOs or choose to stay outside the network. in addition firms that offer plans that cover more of the customers inescapably at the lowest rates will generally gain and retain more customers.Yet with a large firm like Anthem, their firm is widely known and they have larger budgets to continue their companys growth in customers. Conclusion Americans are just now starting to understand the new implications of the Healthcare Reform. Addressing the needs of the American people and reducing the costs of healthcare and making sure all pay their share so the burden does not fall on the government is intend to help reduce the strain on the economy and make being ample more affordable for the citizens of the United States.References Oligopoly Examples. (n. d. ). In YourDictionary. com. Retrieved August 5, 2012, from http//examples. yourdictionary. com/oligopoly-examples. hypertext markup language Thomas, C. R. , & Maurice, S. C. (2011). Managerial economic science (10th ed. ). New York, NY McGraw-Hill/Irwin. Calculating Group Health Insurance. (2008, October). In Allied Quotes. com. Retrieved August 4, 2012, from http//www. alliedquotes. com/Resources/Group-Health- Insurance-Rates. html