Health Insurance Essay

2264 Words 10 Pages
HistoryAetna, Inc. is an American health insurance company, which is the direct descendant of Aetna (Fire) Insurance Company, of Hartford, Connecticut. In 1850 Aetna began operation of an Annuity Fund and the company would soon to be known as Aetna Life Insurance Company. In 1899 Aetna became one of the first publicly held insurance companies to enter the health insurance field. Since then Aetna has become committed to providing access to cost-effective health care of the highest possible standard, to protect people against health-related risks and enable them to achieve both good health and financial security. Aetna has provided such products and services for 150 years, and has the ability to be a leader in building a strong and effective …show more content…
Moreover, a large client base is needed to facilitate risk management. Health insurance companies need to have enough patients covered so that they have large enough proportion premiums from healthy patients to cover the costs of taking care of sick patients. There are also large capital requirement because health insurance companies are required by law to have a certain amount of reserves available to pay claims at all times. Health insurance companies are also required by law to pay out 50-65% of their premiums in medical cost coverage. These government and legal barriers not only determine a large portion of the financing the health insurance companies, they also determine who can operate a health insurance company through licensing.

Supplier Power (Low)

Suppliers to the health insurance industry include providers, hospitals, and medical device/pharmaceutical companies. Most suppliers have low price sensitivity due to intense competition to get on a health insurance companies provider list or formulary. Since most people cannot afford medical care without health insurance, health insurance companies provide a product that is critical for a patient to be able to access a supplier's service or product. Additionally, the size of the health insurance company relative to their suppliers tends to be large. Because of their size,

Related Documents