1. An insurance market consists of high-risk patients, who average $40,000 in spending per year, and low-risk patients, who average $1,000 per year. Overall, low-risk patients represent 90 percent of the population. What would average spending be for a population like this?
2. Refer to Exercise 6.1. What would average spending be if low-risk patients were 92 percent of the population?
3. Refer to Exercise 6.1. If an insurer sold 100,000 policies at $6,000, what would revenue be? What would medical costs be if the insurer paid for everything and low-risk patients were 90 percent of the population? How would that change if low-risk patients were 92 percent of the population?
4. Why did hospitals have limited incentives to reduce readmissions prior to the ACA?