Assume That 50 Percent of the Population Consisting of 2,000

question 14

Multiple Choice

Assume that 50 percent of the population consisting of 2,000 low-risk people and 1,000 high-risk people choose a comprehensive health insurance plan having a break even premium of $800.The remaining 50 percent, also consisting of 2,000 low-risk people and 1,000 high-risk people, choose a Health Maintenance Organization plan having a break even premium of $400.If high-risk people submit claims worth $2,000 under the comprehensive plan and $1,000 under the HMO plan, which of the following situations will occur?

• A)High-risk people will shift to the comprehensive plan resulting in an increase in its premium rate.
• B)High-risk people will shift to the HMO plan resulting into a fall in its premium rate.
• C)Low-risk people will shift to the comprehensive plan resulting in a substantial decrease in its premium rate.
• D)Low-risk people in both groups will stick to their respective plans and minimize their losses.

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Definitions:

Biological Parents

The parents who are genetically related to the child, contributing half of the child's genetic makeup each.

Metabolize

The biochemical process by which organisms convert substances into energy or materials necessary for cellular function and growth.

Taste Buds

Sensory organs located on the tongue that are responsible for perceiving different types of tastes.

Action Potentials

Brief electrical impulses that are the means by which information is transmitted along neurons.