Porter Five Forces Analysis of the Healthcareinsurance Indistry in the State of California.

Porter’s Five forces in the healthcare insurance industry.

My write up on Porter’s Five Forces involves the healthcare insurance industry in the United States. There are many healthcare organizations competing with one another in this market. The nature of this competition and the organizations participating in it varies from state to state. It will be extremely difficult to apply Porter’s Five Forces theory to the entire country as different states have different regulations governing healthcare. Due to this, different “clusters” of organizations operate in each state. Each “cluster” of organizations is unique to that state. Therefore, I will focus my write up only for the market in the state of California.

1) Rivalry (intensity of competition among existing competitors)

Kaiser Permanente is the dominant player in the healthcare insurance industry in the state of California, comprising of Northern and Southern regions. However, it has to compete with for-profit organizations like Blue Cross / Blue Shield, Aetna, Humana among others. The competition is primarily to get more subscriber base from the existing pool of subscribers residing in that state. These organizations are coming out with more novel products aimed at specific demographic of the state’s population. They are also introducing non-traditional health plans.

For example, there are now health plans for young and single people living in California. These plans have a very low monthly premium but very high deductibles. A Deductible HMO plan would be a plan wherein individual subscribers decide how much of out-of-pocket expenses they can afford to pay out in a year. They also decide (based on their past history) how many times they will need to visit a doctor. Based on their unique findings a health plan carrier will offer them their own “customized” health plan. Since insurance companies have to attract more subscriber from a seemingly diminishing pool, there is intense competition among...