Health states in the coming year:. Health states in the coming year:. Please use the information in Table 1 to answer questions 14 on the following page. Tables are provided for each plan for your convenience. Although you do not have to use the tables if you prefer a different methodology, you do need to show your work.
Table 1  
Plan 1  Plan 2  Plan 3  
Premiums  $80/month  $100/month  $150/month 
CoPays  $30  $15  $10 
Deductible  $1,000  $500  $200 
Coinsurance  80/20  80/20  80/20 
OutofPocket Max  $3,000  $1,000  $300 
Plan 1  
Charges  Copay  Remaining Balance  Insurance Payment  Patient Payment  Total OOP for Visit  Total OOP Towards Deductible  Total OOP YTD  Total OOP Twrds Deductible YTD  Total Insurance Payment YTD  
Visit 1  500  
Visit 2  500  
Visit 3  500  
Plan 2  
Charges  Copay  Remaining Balance  Insurance Payment  Patient Payment  Total OOP for Visit  Total OOP Towards Deductible  Total OOP YTD  Total OOP Twrds Deductible YTD  Total Insurance Payment YTD  
Visit 1  500  
Visit 2  500  
Visit 3  500  
Plan 3  
Charges  Copay  Remaining Balance  Insurance Payment  Patient Payment  Total OOP for Visit  Total OOP Towards Deductible  Total OOP YTD  Total OOP Twrds Deductible YTD  Total Insurance Payment YTD  
Visit 1  500  
Visit 2  500  
Visit 3  500 
Questions
 What is your total outofpocket for each of the three plans?
 If you select Plan 2, what is your total outofpocket for the second visit?
 If you select Plan 3, what is your total out of pocket for the second visit?
 Given the above scenario, which of the three plans should you choose to enroll in?
 Suppose you currently make $80k/year and you are faced with two possible health states in the coming year: sick or healthy. There is an 87% chance you will be healthy and a 13% chance of being sick. If you are sick, the cost of treatment is $80k. Assume also that you obtain 100u when making $80k under certainty and 87u when making $65k under certainty. Assume there are 4,000 people in the risk pool.
 Graph the utilityofincome under certainty and the expected utilityofincome under uncertainty.
 What is your expected income? What is your expected utility?
 What is the price of uncertainty?
 What is the expected payout?
 What is the minimum premium that must be charged?
 What is the maximum premium that can be charged?
 Suppose you currently make $50k/year and you are faced with two possible health states in the coming year: sick or healthy. There is a 94% chance you will be healthy and an 6% chance of being sick. If you are sick, the cost of treatment is $50k. Assume also that you obtain 100u when making $50k under certainty and 94u when making $43k under certainty. Assume there are 2,500 people in the risk pool.
 Graph the utilityofincome under certainty and the expected utilityofincome under uncertainty.
 What is your expected income? What is your expected utility?
 What is the price of uncertainty?
 What is the expected payout?
 What is the minimum premium that must be charged?
 What is the maximum premium that can be charged?
 Suppose you currently make $200k/year and you are faced with two possible health states in the coming year: sick or healthy. There is a 99% chance you will be healthy and a 1% chance of being sick. If you are sick, the cost of treatment is $200k. Assume also that you obtain 100u when making $200k under certainty and 99u when making $190k under certainty. Assume there are 8,500 people in the risk pool.
 Graph the utilityofincome under certainty and the expected utilityofincome under uncertainty.
 What is your expected income? What is your expected utility?
 What is the price of uncertainty?
 What is the expected payout?
 What is the minimum premium that must be charged?
 What is the maximum premium that can be charged?
p(2)
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