Reducing Health-Care Costs, Case 12-1

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Reducing Health-Care Costs, Case 12-1

1. How should Polson communicate its new health-benefits plan to employees? Communication of the new plan is critical if employees are to accept and commit to a managed health-care plan. Employees must understand the strong financial incentives that are present for staying in the network rather than using the traditional indemnity side of the plan. At the same time, details of the new plan must be communicated in such a way that it is clear to employees that Polson is committed to a strong health care program and cares about them as individuals. The approach used by “Polson” began with a task force formed by HR executives at their corporate office in Morristown, NJ. They were given the challenge to build a custom design program that would hold down health-care premium costs to a reasonable level. In March 2009, Polson signed a three-year agreement with Whitefish Corporation for a managed-care program called “The Health Care Connection.” This plan covers medical, dental, vision, and hearing care, as well as prescription medications. It also includes a well-care program, which covers annual physical exams and prenatal care. Whitefish Corporation also guarantees annual premium increases of less than 10 percent during each of the three contract years on the managed-care side of the program. As noted in the text, it is important that benefits be communicated to employees so that they are aware of them and understand them, but in such a way that employees trust the information they receive and are convinced of the value of the benefits package (Cascio, 2013, p. 496). This may be achieved by focusing on providing employees with benefits information they need, when they need it (e.g., through interactive computer programs or the intranet). Such systems use computers (decision support systems), telephone hotlines, and/or interactive videos to provide the information that employees need in the timeliest manner.

2. What...
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