Assume a pool of 115 people in an insurance pool (a group of people insured through community rating). It is estimated that a small number in the pool will have significant pre- existing conditions as indicated in the table. Based on the age of these 115 people, the insurance company estimates the following distribution of health care claims (which includes necessary profit and administrative costs of the insurance company). Number of Insured Antidipated Heath Costs/Year/Person $1,400 $1,500 $1,600 $1,700 $1,800 $1,900 $2,000 $2,100 $2,200 $2.300 $2,400 $2,500 $2,700 $2,000 $2,900 $3,000 $3,100 $3.200 $3.300 $4,000 57,00 $10,000 Everyone joins the poal ad pays the necessary premum in the first year. The clams experience of the customers is faund to be generaly consstent with expeclations of the insurance company. A) What would be the premium In the third year if there is no inflation, based on the company's oxperience from the past year? B) If those customers who have anticipated claims less than 75 percent of the premium now decide that it is not rafional to buy insurance, how many will decide to be insured?
Assume a pool of 115 people in an insurance pool (a group of people insured through community rating). It is estimated that a small number in the pool will have significant pre- existing conditions as indicated in the table. Based on the age of these 115 people, the insurance company estimates the following distribution of health care claims (which includes necessary profit and administrative costs of the insurance company). Number of Insured Antidipated Heath Costs/Year/Person $1,400 $1,500 $1,600 $1,700 $1,800 $1,900 $2,000 $2,100 $2,200 $2.300 $2,400 $2,500 $2,700 $2,000 $2,900 $3,000 $3,100 $3.200 $3.300 $4,000 57,00 $10,000 Everyone joins the poal ad pays the necessary premum in the first year. The clams experience of the customers is faund to be generaly consstent with expeclations of the insurance company. A) What would be the premium In the third year if there is no inflation, based on the company's oxperience from the past year? B) If those customers who have anticipated claims less than 75 percent of the premium now decide that it is not rafional to buy insurance, how many will decide to be insured?
Chapter4: Economic Evaluation In Health Care
Section: Chapter Questions
Problem 8QAP
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Transcribed Image Text:Assume a pool of 115 people in an insurance pool (a group of people insured through
community rating). It is estimated that a small number in the pool will have significant pre-
existing conditions as indicated in the table.
Based on the age of these 115 people, the insurance company estimates the following
distribution of health care claims (which includes necessary profit and administrative costs of the
insurance company).
Number of Insured
Antidipated Heath Costs/Year/Person
$1,400
$1,500
$1,600
$1,700
$1,800
$1,900
$2,000
$2,100
$2,200
$2.300
$2,400
$2,500
$2,700
$2,000
$2,900
$3,000
$3,100
$3.200
$3.300
$4,000
57,00
$10,000
Everyone joins the poal ad pays the necessary premum in the first year. The clams experience of the customers is
faund to be generaly consstent with expeclations of the insurance company.
A) What would be the premium In the third year if there is no inflation, based on the
company's oxperience from the past year?
B) If those customers who have anticipated claims less than 75 percent of the premium
now decide that it is not rafional to buy insurance, how many will decide to be insured?
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