Consumer Every Year, Economic Agents

Consumer

Every year, economic agents are presented with the opportunity to change the healthcare coverage they offer to the staff members, but every year, they face the hurdles of the difficult decision. The complexities in making the decision are pegged to the organizational desire of reducing expenditures, but also to the need to use the healthcare plan in a means that generates employee motivation (Fisher, 2008). The current endeavor seeks to assess the decision making process through two distinctive lenses -- those of the human resources direction and those of the employee. In both cases, the employer is a midsize economic agent.

Scenario A -- the human resources director

Describe the selection process you would use to make the most cost-effective and employee-friendly decision

The selection process would be based on the gradual implementation of the following steps:

Creation of the organizational objectives and expectations regarding the healthcare plan

Collection of all necessary information regarding budgets, employee expectations and offers made available by the healthcare plan vendors

Comparison of the collected information through the lenses of cost efficiency as well as employee demands

Direct, open and intense communications with the healthcare vendors in order to collect essential information (detailed throughout the following section). Collection of references regarding the respective healthcare vendors

Review of all information collected, creation of tables and other decision making tools in order to rate the ability of each healthcare plan to support the company in attaining its initially established objectives.

Identifying the best alternative based on the analysis conducted. The estimated shortage of this choice would be represented by increased expenditures. It is as such useful to compute the opportunity cost of selecting the respective solution and identifying the second best alternative. Negotiations would also be launched with the vendors in order to stimulate a more beneficial contract.

2. Identify the information you would need to make this decision.

In order to make the decision, the human resources manager requires extensive information on a wide array of issues. These issues can generically be categorized into three specific sections: financial information, offer and expectations. At the level of the information related to financial considerations, it is already known that the budgets are not flexible. In spite of this recognition, inquiries would be made regarding the following:

The actual size of the budget

The budgets of the previous years

The percentage of the allocated budgets as part of the overall company expenditures as well as party of the overall employee costs

The financial needs to cover for the healthcare demands of the staff members.

At the level of the expectations, it is necessary that the manager becomes aware of the needs and wants of the employees regarding healthcare coverage. Did they perceive the previous plans as sufficiently comprehensive? How would they like to improve them?

Finally, in terms of the available offer, the human resources manager would interact with the vendors of healthcare coverage plans in order to collect information on the costs involved, the services offered as well as any other relevant data. The following questions would be asked at this stage:

What are the costs per physician?

Are there any additional / hidden costs?

What is the degree of flexibility in the healthcare plans? Can some of them be adapted to meet specific company or employee needs?

What electronic support and other technologic innovation are used in the process and to update the system?

What is the duration of repayment for the medical services?

Are the services offered by the firm outsourced or delivered in-house? (Chouffani, 2010)

3. Discuss the ramifications of your decision on employees.

As it has been mentioned in the introductory section, the medical coverage plan is used as an incentive to attract and retain the best staff members. In cases of poor medical coverage, especially when combined with other organizational limitations, the employees are unlikely to become loyal, and as such high employee turnover would be registered. This in turn materializes in adjacent problems, such as higher costs with the staff members, reduced organizational performances and damaged reputation and public image (Tesone, 2008). Therefore, the decision made by the human resources manager regarding the healthcare plan is likely to generate loyalty or loss of loyalty, depending on how each individual perceives the plan as motivation or demotivational.

Scenario B -- the organizational staff member

4. Evaluate the factors that influence your selection of a package.

As an individual employee, impacted by the decision regarding the medical package, the staff member would be influenced by the following factors:

The extent of the medical coverage in order to reveal and assess its ability to serve the healthcare needs of the individual.

The costs involved by the coverage -- detailed throughout the following section.

The evolution of the current plan as opposed to the previous one. A negative evolution would traditionally trigger dissatisfaction, whereas a positive evolution would manifest as a motivational force.

The ability to actually influence the final decision regarding the healthcare plan. This factor is specifically important as it reveals the role of the individual in the decision making process. If the employee is listened and his opinions valued and integrated in the decision process, this is motivational, whereas an opposite situation in which they are not integrated is demotivational.

5. Analyze to what extent the cost of the program influences your decision.

The cost of the program plays a decreased emphasis in the decision and perception of the employee, but only in the scenario in which the cost is covered entirely by the employer. In this situation, the employee militates for a comprehensive healthcare plan which is best able to serve as many needs and wants as possible. They will as such emphasize on a costly plan and will not consider the expenditures involved.

In a different scenario -- and traditionally the more common one -- the costs of the medical coverage are only partially covered by the employer and partially by the employee as well. This distributed responsibility and the high costs have contributed significantly to the creation of the current health care crisis in the United States (Krugman and Wells). Regardless, when the employee has to pay for their own medical services -- or the healthcare plan -- the cost is a major factor in the final solution. In this order of ideas, the employee will seek an efficient balance between cost and quality of the healthcare package.

6. Explain possible alternatives if you were to choose not to participate in the benefits package for the upcoming year.

In a context in which -- generally for financial reasons, but others as well -- the employee would choose not to participate in the healthcare program offered by the employer, they are presented with two alternatives. The first is that of not using any medical insurance and relying on free clinics whenever medical problems are incurred.