Running head: BANK4’S NEW CHRO CONFRONTS HEALTH CARE COSTS 1

Bank4’s New CHRO Confronts Health Care Costs

Name

Institution
BANK4’S NEW CHRO CONFRONTS HEALTH CARE COSTS 2

Bank4’s New CHRO Confronts Health Care Costs

Introduction

Bank4 is facing a healthcare cost problem that needs to be addressed. There are three

options that Sara can explore to deal with the situation and these are: instructing the carrier to put

in place a plan design that would restrict access to the most expensive health care delivery

system in each large metropolitan area; charge members a higher point of service fee (such as

30%) to see the highest cost providers, even if they are in plan; and make available a robust

transparency mobile app, which would allow Bank4 health plan members to ascertain prices

before they receive medical care. The question is, what are the pros and cons of each of these

options?

Instruct the carrier to put in place a plan design that would restrict access to the most

expensive health care delivery system in each large metropolitan area

Pros

The main advantage of restricting access to the most expensive healthcare delivery

system is it would reduce the cost of healthcare for Bank4. This option would thereby help Sara

achieve her goal of addressing the healthcare cost problem. Another advantage is this strategy

can allow bank to expand coverage for employees. With employees in large metropolitan areas

using fewer funds, the bank can distribute more coverage to employees in rural areas.

Cons

The main disadvantage, on the other hand, it would lower access to healthcare. As is

evident, there are areas such as personalized cancer drugs that are expensive. Restricting access
BANK4’S NEW CHRO CONFRONTS HEALTH CARE COSTS 3

may mean that some of these areas may be affected. This means that employees who suffer from

chronic conditions may be unable to access quality healthcare. Another disadvantage is this

would not necessarily improve the distribution of coverage in rural areas because the

concentration of employees and providers in the metropolitan areas.

Charge members a higher point of service fee (such as 30%) to see the highest cost

providers, even if they are in plan

Pros

One of the advantages of this option is it would reduce the burden on healthcare cost on

the company. Charging a higher service would ensure that some of the healthcare cost is catered

for by the employer. This option would also discourage employees from opting for high cost

providers. This is because of the knowledge that going for high cost providers means spending

more.

Cons

The main disadvantage is it would contribute to inequality in access to healthcare. High

earners would be able to pay more service fee and access medical care when compared to low

earners. This would be disadvantageous particularly for low income earners who need

specialized yet more expensive care.

Make available a robust transparency mobile app, which would allow Bank4 health plan

members to ascertain prices before they receive medical care

Pros
BANK4’S NEW CHRO CONFRONTS HEALTH CARE COSTS 4

The main advantage of this option is it would make it possible to monitor the expenditure

and thereby control it where necessary. For example, where possible, members would go for

cheaper options provided the same services are provided.

Cons

The main limitation for this option is care one receives would be determined more by the

cost involved rather than quality. The focus on price may see employees receiving poor quality

care in an attempt to keep the cost down.

Recommendation

In order to deal with this situation, Sara needs to make available a transparency mobile

app that would help monitor prices before care can be provided. However, the focus should not

only cost alone. When examining the option employees should go for, there is need to examine

the services provided, the quality of these services, and cost. The option selected should one that

is fairly cost effective yet provides quality healthcare services to Bank4 employees.
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Reference

Gruber, J., & McKnight, R. (2016). Controlling health care costs through limited network

insurance plans: Evidence from Massachusetts state employees. American Economic

Journal: Economic Policy, 8(2), 219-50.