Reference no: EM131392747
Suppose that the insurance company would set the premium by imposing a zero profit restriction. That is, the premium would be set to be (1+L)EB, where L is the loading factor and EB is the expected benefit. Let us assume that L = 20%.
a. Let us first consider a homogenous population of 10,000 people, each has a probability of 0.3 to incur a medical bill of $10,000, and a probability of 0.7 to be healthy. If the insurance company decides to offer health insurance plans with a uniform premium to this population, what would be the premium?
b. Let us now assume that there are 1,000 newcomers to this population. However, the newcomers are less healthy. They have a probability of 0.5 to incur a medical bill of $20,000 and a probability of 0.5 to be disease free. If the insurance company cannot distinguish the newcomers from the rest, it has to offer health insurance plans with a uniform premium to everyone. What would be the new premium in dollar amount? Calculate the percentage change in premiums for the existing policy holders.
c. Based on this simple calculation, what can we say about the impact of “pre-existing condition” provision included in the ACA?
|
Appropriate fiscal policy to ensure stability
: The US government is over $19 trillion in debt. Is the debt a burden on future generations? Explain. If one is concerned about the rise in US government debt, what would be an appropriate fiscal policy to ensure stability?
|
|
Floating exchange rate model
: In the IS-LM-BP floating exchange rate model, a depreciation of the dollar is supposed to correct/improve the US trade balance. Does a depreciation of the dollar lead to an improvement in the BoT deficit? Explain in detail.
|
|
Calculate the variance and associated risk premium
: Consider a simplified model of preventive care. Suppose that there is only one disease, flu, which can be eliminated by taking a flu shot, with a cost of $110. The probability of getting flu is 0.2. Calculate the variance and associated risk premium...
|
|
Define input variables and output variables
: Describe a typical microwave oven in the framework of a discrete-state process. Define input variables, output variables, and the sequence of serial/parallel events given Figure.
|
|
About the impact of pre-existing condition
: Suppose that the insurance company would set the premium by imposing a zero profit restriction. That is, the premium would be set to be (1+L)EB, where L is the loading factor and EB is the expected benefit. Let us assume that L = 20%. Based on this s..
|
|
Explain the benefits of exercise and proper nutrition
: Describe at least two ways you will encourage development of gross motor skills for this age group on a daily basis. Make sure to include how you will assess learning, as well as all materials you will need and how your classroom design or outdoo..
|
|
The marginal social cost of each concert
: Summer concerts are a pure public good in the town of Bucktown, The marginal social cost of each concert every night is at $500. Explain why it would be inefficient to require each resident of Bucktown to hire their own band at $500 for each concert.
|
|
Develop control system of automatic coffee vending machine
: Develop the control system of an automatic coffee-vending machine. Insertion of a coin and pushing of buttons provides a paper cup with coffee that can be black, with sugar, with cream, or with both. Describe the features of the machine as a disc..
|
|
Explain how convergence differs from harmonization
: Explain how convergence differs from harmonization. In your opinion what are the two most important arguments in favor of international convergence for U.S. public companies?
|