This paper is an economic analysis of healthcare providers Anthem and Kaiser Permanente. Included will be information on competition, pricing and the effects of elasticity of demand has on both companies.
One of the major concerns facing Americans today is the discussion of healthcare and how employers can afford to purchase healthcare for their employees. With the recent approval of President Barack Obama’s Healthcare Reform Bill, it has placed added pressure on both small and large business owners to provide insurance for their employees or be faced with tax penalties. The healthcare industry is an oligopoly meaning that there are few firms involved in the marketplace and they hold a substantial portion of the marketplace. They understand that their industry is interdependent and every decision or action made will have rippling affects on the other firms. They too will choose to make changes to keep their standing in the marketplace. In the healthcare industry, the two major companies are Anthem and Kaiser Permanente (Thomas & Maurice, 2011). Pricing & Competition
When looking at companies that do business in oligopoly, there are many traits that they resemble. Their prices will remain relatively the same as their competitors, and lower then those companies that deal in a monopoly (www.yourdictionary.com). Both Anthem and Kaiser Permanente are highly competitive in their standings in the marketplace. Everything from their marketing efforts to their pricing is geared toward gaining a bigger share of the marketplace. Prices are one of the major differences between both companies. Prices for both companies are generated through underwriting and governed by community ratings. These ratings are surveys are conducted in the community where the companies serve to help determine the general health of their customers and...