on 240: Assignment 4: Question Set 4 topic: Rating an Insurance Premium Grade Points: 5 Completion = 1 pt Question 1 = 2 pts Question 2 = 2 pts Download the document entitled "Cost&Benefit-Q$4. The background information for answering the questions are in that document. Question 1: Expected Value Cost of AML to individuals living in the county Within the population of the county (520,000 people) the prevalence rate of AML has increased by 0.002% per year (in decimal form, 0.00002). The average cost of treatment associated with one case of AML from diagnosis to death is $165,000. in prevalence. Question 1: Find the Expected Value Cost as the product of the actual cost of treatment and the increase What is the EV Cost? Question 2: How should health insurance policies in Hahnemann County be rated? The population of 5200,000 comprise 160,000 households. In question 1 above, you found the Expected Value Cost associated with one individual. Now we would like to translate this into an insurance premium that will cover all members of a household for 80% of the EV cost. Step 1: There are 3.25 statistical persons in a household. To find the Expected Value Cost to a household, multiply your EV cost for an individual by the 3.25 statistical persons in a household. What is the EV Cost per household? Step 2: The insurance company will cover 80% of the EV cost per household, and the remaining 20% will be a co-pay at the time of treatment if treatment is needed. Multiply your EV cost per household by 80%. That is the rating on the premium, paid in addition to the $8300 premium that is already being paid. How much is that rating? Copyright @ Patricia Awerbuch, 2014. This work may not be used, reproduced, or distributed outside the Drexel LeBow College of Business course Econ 240 Economics of Health Care Systems without the express written permission of the author