Answer to Question #91631 in Microeconomics for Ida

Question #91631
If there are 50 people in insurance pool. based on their age, the company estimated the following distribution of healthcare claims
No. of insured Anticipated health cost/year/person
5 $3300
5 $4000
5 $7000
5 $10000
If there is one common premium for those in the insurance pool what would it be? with no profit added here, what will be the average cost.
1
Expert's answer
2019-07-15T09:29:12-0400

If there is one common premium for those in the insurance pool, then it would be not less than:

(5×$3300 + 5×$4000 + 5×$7000 + 5×$10000 + 30×0)/50 = $2430.

With no profit added here, the average cost is the same as in the first question, so it is $2430.



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