Multiple variables including employment, legal, and advance medicine factors contributed to past growth that the health insurance industry experiences.
Post world war II, the chance of attracting talented workers back into the workforce is scarce. Many lives and talents were lost in the war and the unemployment rate skyrocketed. Employers were left to fight over a small pool of talents (“Shift to Employer-Based,” n.d). In order to attract the best workers, employers were pressured to increase wages. Increasing wages will cause an instability in the economy, as demand for goods increases while the supply for workers decreases. If employers increase wages, the cost of goods will increase as well. To put a price control on wages, the U.S. government had to provide an alternative solution to increase workers supply. This price control and demand for worker supply led to the government intervention of the Revenue Act 1939; incentivizing employers to offer employee health benefits by getting a tax break (EBRI, 2002). This Revenue Act paved the way for employers to attract new talents into the workforce and also increased demand for employer-sponsored health insurance. Little by little, this factor contributed to the success and the development of commercial health insurance we have today.
The health insurance industry is also heavily regulated. This strict regulation began in 1939 when employer-sponsored health plan was first introduced and passed into law to increase the United States’ unemployment rate (EBRI, 2002). Government officials who regulate the health insurance industry are state insurance commissioners. Each health insurer must meet their state’s various req...
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...egotiate health care prices down to employers and individual discounted health care rates; which are much more affordable than self-pay options.
Threats of Existing Competitors and Government Regulations- The current top health insurance companies for 2014 are UnitedHealth Group, Kaiser Foundation, WellPoint Inc., Anthem, and Aetna Group (Heilbrunn, 2014). Due to strict government regulations on how health insurance companies can structure their health plans, it is always difficult for health insurance companies to differentiate themselves (Groat, 2007). Therefore, competition is high for health insurance companies to compete with existing rivalries in the health insurance industry. In order to distinguish one health insurance company from another, the focus on product customization, specialization, cost reduction, and global expansion are crucial areas for survival.
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