Investigation of the Rising Cost of Insurance Premium of Employees in Sparkle Industry - Research Paper Example

? Sparkle industry APRIL/23 transmittal of an investigationof the rising cost of insurance premium of employees in sparkle industry. In responding to your concern of February, 14, I have done the analysis on the rising cost of insurance premium among employees of Sparkle industry. Specifically, the research was to find the effects of usage of tobacco, drinking of alcohol and living unhealthy lifestyle among the employees in sparkle industry. I am pleased to give my findings which give a summary for each of them. Concerning the usage of tobacco, I found out that a large population surveyed used the substance. Tobacco usage has adverse effects in the body such as lung cancer which causes sudden death when no treatment is carried out. It is in this regard that Health Insurance Company charges higher cost since treating such kind of diseases is expensive. Alcohol drinking and unhealthy lifestyles also contributed to the increase of the cost of health insurance even though it was minimal compared to tobacco usage. My sincere gratitude goes to employees of sparkle industry who were very obedient in responding to my survey questions. I am also thankful to your company for having trust in the responsibility assigned. For any help concerning the report, you can give me a call. Enc. Report EFFECT OF CIGARETTE SMOKING AND UNHEALTHY LIFESTYLE ON THE COST OF HEALTH INSURANCE PREMIUM PAYABLE TO THE INSURER ON BEHALF OF EMPLOYEES IN SPARKLE INDUSTRY AS A BENEFIT PACKAGE. A RESEARCH REPORT PRESENTED FOR EVALUATION IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF DEGREE OF BUSINESS ADMINISTRATION. TABLE OF CONTENT Transmittal letter…………………………………………………………………………….….1 Title page………………………………………………………………………………………..2 Table of Contents……………………………………………………………………..………..3 Executive summary…………………………………………………………………………….5 1.1. INTRODUCTION 1.2. Background of the Study…………………………………………………………………6 1.3. Statement of the Problem………………………………………………………………....6 1.4. Research Questions……………………………………………………………………….7 1.5. Objectives of the Study…………………………………………………………………..7 1.6. Justification of the Study……………………………………………………………..….7 1.7. Scope and Limitations of the Study……………………………………………………….8 1.8. Conceptual Framework…………………………………………………………………..8 2.0. LITERATURE REVIEW 2.1. Introduction………………………………………………………………………………9 2.2. Theoretical …………………………………………………………………...................9 2.3 Empirical reviews…………………………………………………………………….….10 3.0. RESEARCH METHODOLOGY 3.1. Research Design…………………………………………………………………………11 3.2. Study Area……………………………………………………………………………….11 3.3. Study population and Sampling…………………………………………………………11 3.4. Data Collection…………………………………………………………………….…….11 4.0 DATA ANALYSIS AND PRESENTATION……………………………………………12 5.0. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS………………………17 5.1. Summary………………………………………………………………………………..17 5.2. Conclusions……………………………………………………………………………..18 5.3. Recommendations……………………………………………………………………....18 REFERENCES………………………………………………………………………………..19 Executive summary The aim of this study was to establish the effect of cigarette smoking and unhealthy lifestyle on the cost of health insurance premium among employees in sparkle industry. The specific objectives was to find out the relationship between tobacco smoking and health insurance premium cost, establish the need to address the cost increase and to determine the effect of unhealthy living standard on the cost of health insurance. Stakeholders in the sparkle industry have seen the need to look into the factors that contribute to high health insurance premium in the organization. As a result, the stakeholders have come up with two categories of the factors leading to high cost premium. The two factors are tobacco smoking and unhealthy living standards. Tobacco smoking is considered to be the leading factor contributing to high cost of insurance. This is because of the related disease caused by smoking tobacco. These diseases are expensive to treat and they include lung cancer, stroke and obstructive lung diseases. The analysis has shown that cigarette smoking and unhealthy lifestyle on the cost of health insurance premium among employees in sparkle industry is the contributing factor to the high cost of health insurance premium in the organization. Some of these factors include, use of tobacco, unhealthy lifestyles, age of the insured and drinking of alcohol. Tobacco usage contributes to a larger percentage of high cost of health insurance closely followed with alcohol consumption. Unhealthy life style contributes to a smaller percentage. The recommendations on the issue of rising cost of health insurance is for the employer to formulate policies that will help in reducing or quitting smoking, encouraging healthy life styles among employees and introducing smoking cessation policies. SECTION ONE 1.0 INTRODUCTION 1.1 Background of the Study Several current studies show that when an organization assist its employees to lead a healthy life style free from alcohol and use of tobacco, the company will reduce the cost of premium payable. Besides this, the company will assist the employees to lead a good healthy life. This is because tobacco usage is known to have adverse effects in the life of person. Such effects include lung cancer, throat cancer, and premature delivery by women (Slama, 1995). A research done in the United States recently shows how a certain company had employees who used tobacco and the company never took any measures to help them. The management only realized later that amount of money allocated to health insurance as employees benefit was on the increase and this affected their financial in the long run (USA, 1988). 1.2 Statement of the Problem Stakeholders in the sparkle industries have realized the need to look into the factors that contribute to high health insurance premium in the organization. As a result, the stakeholders have come up with two categories of the factors leading to high cost premium. The two factors are tobacco smoking and unhealthy living standards (Slama, 1995). Tobacco smoking is considered to be the leading factor contributing to high cost of insurance. This is because of the related disease caused by smoking tobacco. These diseases are expensive to treat and they include lung cancer, stroke and obstructive lung diseases (Brigham, 1998). 1.3 Research Questions This Study was guided by the following research questions: 1. To what extent do tobacco smoking cost sparkle industry health insurance premium? 2. To what extent do unhealthy living standards contribute to health insurance cost in sparkle industry? 3. What are the challenges faced by sparkle industry in trying to reduce the health insurance cost? 1.4 Objectives of the Study Overall Objective: The overall objective of this study was to find a solution of reducing health insurance premium Specific Objectives: Specifically, the study sought to: 1. Find out the relationship between tobacco smoking and health insurance premium cost. 2. Establish the need to address the cost increase. 3. To determine the effect of unhealthy living standard on the cost of health insurance. 1.5 Scope of the Study Our study was primarily set within the context of the sparkle industry, with the focus on the sparkle industry mainly to explore and evaluate the effect of cigarette smoking and unhealthy lifestyle on the cost of health insurance premium among employees in sparkle industry. Sparkle industry was preferred for the study because of the rising cost of health insurance among its employees in the organization. These reasons made the data collected from this study area to be one of the most reliable. 1.6 Significance of the Study The findings of the study are useful to different stakeholders of the population. Firstly, to sparkle industry, the management will be able to find the major contributing factor to increase in health insurance cost which they will be able to address. The management will be able to advise their employees on the cost crisis and this will help them find solutions on how to reduce the cost. Secondly, the findings of this study can be used by employees involved in smoking and unhealthy lifestyles to change their behavior. This can be done through intensive counseling by sparkle industry management to their employees involved in such kind of behavior. Limitations of the Study Time was a major factor to the researchers as the research of this kind required enough time in gathering of data, carrying out the research, distribution, collection and analysis of survey. 1.7 CONCEPTUAL FRAMEWORK The underlying principle of this research was to recognize the effect of cigarette smoking and unhealthy lifestyle on the cost of health insurance premium among employees in sparkle industry (Ghodse, 2005). Health insurance cost depends on many factors such as the mass index of the body, tobacco usage, the gender, previous medical conditions and the history of the family. Lifestyle factors include geographical conditions and profession of the insured (Ghodse, 2005). 2.0 LITERATURE REVIEW 2.1 INTRODUCTION This chapter discussed and reviewed both the theoretical and empirical literature related to the effect of the of cigarette smoking and unhealthy lifestyle on the cost of health insurance premium among employees in sparkle industry. 2.2 Theoretical Review Organizations are aware that the effects on the use of tobacco among its employees can be felt in the organization through the health benefit packages. Literature provides significant relationship between the use of tobacco and health insurance premium (Christakis et, al 2008). Research has found that companies with employees who smoke do pay higher premiums because of the intense effects tobacco has in their bodies. Such effects include lung cancer, stroke and increased blood pressure which are known to be the killer disease and hence higher premium (Chassin et, al 2005). Keeping in view of these effects that tobacco has, companies resorted to find ways of solving the issue since it had adverse effects on the financial statement of the company. This is because of the high premium required to be paid to the insurer (Christakis et, al 2008). The age at which an individual is initiated to start using tobacco is also alarming. From our research we find that a bigger percentage comprised of youthful age between 18-45 years. This age bracket is very productive and hence most organization will tend to go for them. Recently, use of tobacco has increased due to reasons such as for leisure, influence by friends and a form of managing stress (Graves, 2000). In the last 4 years, organizations have invested billions of dollars to help their employees who are smoking to either quit smoking or reduce the rate of smoking. This is because they found out that it is expensive to both in the short and long term to pay high cost of health insurance. This is because high health premiums are caused by certain factors that can be avoided by employees (Osinubi, 2005). 2.3 Empirical Review Excess medical cost is attributed to use of tobacco, this is according to (Christakis et, al 2008). This is because it is related to a larger percentage of issues related to health. For example, it causes death that is preventable and according to the statistic the death toll is 14500 people annually. Another example is that after 12months of smoking, the victim has a high risk of dying caused by lung disease. In order of treatment is approximated to be $5475. This is a huge amount of money that can be saved and used in other uses (Graves, 2000). Use of tobacco after a prolonged period can lead to lung cancer and this is considered to be a very expensive disease to treat. It can cost approximately $54,800 to treat it. This is a huge amount of money that an organization can spend (Houston, 1993). Literature finds a large number of studies that highlight the satisfaction of organizations and employers who have helped their employees to either quit or reduce usage of such substance in their lives. Although there are challenges being faced by the stakeholders such as getting into the privacy of an employee, negative attitude from the employee and unwillingness to change from employees part. 3.0 RESEARCH METHODOLOGY This section presented the methodology of the research and included the following: The research design, the study area, population, sample and sampling design, data type and data collection method, data analysis and presentation. 3.1 Research Design In this study, survey research and descriptive research were adopted. Survey research ensured that the data collected was more appropriate and provided answers to the research questions based on the effect of cigarette smoking and unhealthy lifestyle on the cost of health insurance premium among employees in sparkle industry. 3.2 Study Population and Sampling In this research study, the target population surveyed was 1031 respondents with 82% response rate. The population surveyed was employees of sparkle industry who are getting health insurance package. 3.3 Data Collection The study used both qualitative and quantitative data, questionnaires, interviews and observations to collect both primary data and secondary data. 3.4 Sample and Sampling Design The research adopted simple random sampling in choosing and selecting the respondents. A sample of 1031 employees was selected. Applying this technique led to a 95% level of accuracy and confidence and a 5% error margin. This threshold is within the acceptance of the business and the social researches. 3.5 Data Collection Instrument and Validation The questionnaires were first examined by the group itself and the academic experts in the health insurance department and ensured relevance and that they were understandable and logical. Kuder Richardson’s formula was used to estimate internal consistency and ensured the questionnaires had a high reliability coefficient, suggesting the same skill and knowledge base. 4.0 DATA ANALYSIS AND PRESENTATION The questionnaire data gathered through interviews were analyzed using content analysis by identifying the relevant information so as to capture knowledge and perception concerning the increments in the insurance premium. The responses in the questionnaire were examined for completeness and consistency. Statistical tests were carried out to determine the relationships between the variables using SPSS and other relevant computer programmes (Boyle, 2004). The analyzed data was summarized using statistical charts, graphs, frequency tables and percentages. It was also summarized in inferences and the necessary recommendations were made. Tests for independence such as the Chi-Squire Test and the Pearson’s’ Correlations were used. RESULTS AND ANALYSIS: A table showing the percentages of the survey carried out according to age bracket. Age bracket Percentage 18-25 12% 26-35 43% 36-45 30% 46-55 6% 56 and above 9% Table 1 analysis From this data, it was realized that about 85% of the respondents interviewed were at a very youthful stage that is 18 to 45 years. This implies that out of 1031 people that were surveyed, 876 are youthful persons. From the previous studies, youths are known to lead unhealthy life styles such as drinking and smoking. Table 2 A table showing categories of the survey a) I consider my lifestyle a healthy lifestyle Details Percentage Strongly disagree 12 Disagree 5 Not sure 16 Agree 42 Strongly agree 25 According to the table, most employees in sparkle industry lead a healthy life. This is evident from the survey carried out which shows that 67% of employees either agree or strongly agree that they consider their life a healthy lifestyle. However the other 33% does not lead healthy lives which can be a contributing factor to the rise of health insurance cost premium. Graphical representation of how employees responded to the living a healthy lifestyle. b) I drink alcohol Particulars Percentage Never 8 Occasionally (1-2 drinks or more per month) 41 Socially (1-2 drinks or more per month) 38 Everyday 13 Graphical representation of how employees responded to “I drink alcohol”Table 2 analysis From the table and the graph, it is evident that I higher percentage of employee take part in drinking alcohol. This percentage totals to 92% of the employees surveyed. Alcohol has got effects on the body when taken without control. In our research it is evident that a larger percentage of employees take control on how they drink. This accounts to 79% who drink 1 to 2 bottles per month occasionally or socially. For the employees drinking on a daily basis, the percentage is 13% which can contribute to high insurance premium. c) I use tobacco Details Percentage Never 37% Not in one year or less 13% Occasionally 19% Use tobacco daily 30% From this table the researcher can say that out of the total number of employees surveyed, a bigger percentage participates in the use of tobacco. Use of tobacco accounts for 62% of the population surveyed while none usage of tobacco accounts for 37%. This shows a clear picture of why there is an increase of health insurance premium among employees of sparkle industry. Graphical representation of how employees responded to “I use tobacco” 5.0 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 5.1 Summary The aim of this study was to establish the effect of cigarette smoking and unhealthy lifestyle on the cost of health insurance premium among employees in sparkle industry. The specific objectives were to: Find out the relationship between tobacco smoking and health insurance premium cost, establish the need to address the cost increase and to determine the effect of unhealthy living standard on the cost of health insurance. This was a case study designed because of the need to address the rising cost of health insurance and also increase in health insurance premium. The study target population consisted of 1031 employees who were drawn from sparkle industry. The surveyed population of 845 respondents was drawn from this population which made up of 82% response rate. Data for this study was obtained through questionnaires administered to the employees of sparkle industry. Analysis of data was done using statistical package for social scientist and qualitative data analyzed by content analysis. The data was presented by way of tables and graphs. The result of the study indicates that tobacco usage contributed more to the increase of health insurance cost and premiums which accounted for 62%. This was followed by drinking of alcohol which is 92%. Although in alcohol out of the 92% only 13% do have a major effect on the insurance premium because of the daily drinking (Gochman 1997). The results equally show that healthy lifestyle by employees reduces the cost of insurance health. 67% of employees in sparkle industry do lead a healthy lifestyle. 5.2 Conclusion The analysis on the effect of cigarette smoking and unhealthy lifestyle on the cost of health insurance premium among employees in sparkle industry has led to the identification of factors that affect the cost of health insurance and premium in the organization. Some of these factors include, use of tobacco, unhealthy lifestyles, age of the insured and drinking of alcohol. Use of tobacco contributes to a larger percentage of high cost of health insurance closely followed with alcohol consumption. Unhealthy life style contributes to a smaller percentage. 5.3 Recommendations Based on the finding of this report, the following recommendations were made as a way of reducing cost of health insurance and premium: 1. To address the rising cost of insurance health, the employer should introduce a smoking cessations policy and procedure. This will help in reducing smoke related diseases which eventually will help reduce cost of health insurance 2. The management should be able to support employees who have interest in quitting smoking. This support may include counseling at work place, providing support financially to them in their medications and connecting these employees to cessation programs. 3. Sparkle industry has to ensure that the benefit package covers smoking cessation and also medications. This can be done by informing employees through distribution of information. 4. In order to discourage smoking, the management should abolish sites such as smoking areas that are meant for smoking in the work place. This will help employees to slowly by slowly reduce smoking since smoking is an addictive activity and cannot be quite at once. 5. The employer should have a sensitization program that focuses on the benefits of a healthy lifestyle and encourage employees to uphold healthy lifestyles as this will ensure good health. REFERENCES Graves, B. B. (2000). Tobacco use. Mankato, Minn: LifeMatters. Houston, T. P. (1993). Tobacco use: An American crisis: final report of the conference, January 9-12, 1993, Washington, DC. Collingdale, Pa: DIANE Pub. Co. Osinubi, O. (2005). Tobacco control in the workplace. New York: Nova Science. Boyle, P. (2004). Tobacco and public health: Science and policy. Oxford [u.a.: Oxford Univ. Press. Warner, K. E., & Robert Wood Johnson Foundation. (2006). Tobacco control policy. San Francisco: Jossey-Bass. Blanpain, R., & Anderson, G. (2005). Smoking and the workplace. The Hague: Kluwer Law Internat. Brigham, J. (1998). Dying to quit: Why we smoke and how we stop. Washington, D.C: Joseph Henry Press. O'Donnell, M. P. (2002). Health promotion in the workplace. Albany: Delmar Thomson Learning. 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