2. Suppose the equilibrium price for an average hospital stay in the absence of insurance isS10,000. At that price, 1000 people are hospitalized each year. Now suppose an insurer offers apolicy to lower the out of pocket price of a stay to S100, and at that price, 1200 pcople arehospitalized.How much TOTAL premium revenue must be collected to finance thisarrangement? HINT: you arc trying to brcak even here to get revenucs to matchcosts. You are given information that indicates cost. Now you need to considerrevenues to balance that out. Keep in mind this is asking about premium revenue.There may be other revenue that you are receiving that you should consider whentrying to calculate premium revenue to get to break even.a.

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Asked Mar 18, 2020
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2. Suppose the equilibrium price for an average hospital stay in the absence of insurance is
S10,000. At that price, 1000 people are hospitalized each year. Now suppose an insurer offers a
policy to lower the out of pocket price of a stay to S100, and at that price, 1200 pcople are
hospitalized.
How much TOTAL premium revenue must be collected to finance this
arrangement? HINT: you arc trying to brcak even here to get revenucs to match
costs. You are given information that indicates cost. Now you need to consider
revenues to balance that out. Keep in mind this is asking about premium revenue.
There may be other revenue that you are receiving that you should consider when
trying to calculate premium revenue to get to break even.
a.
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2. Suppose the equilibrium price for an average hospital stay in the absence of insurance is S10,000. At that price, 1000 people are hospitalized each year. Now suppose an insurer offers a policy to lower the out of pocket price of a stay to S100, and at that price, 1200 pcople are hospitalized. How much TOTAL premium revenue must be collected to finance this arrangement? HINT: you arc trying to brcak even here to get revenucs to match costs. You are given information that indicates cost. Now you need to consider revenues to balance that out. Keep in mind this is asking about premium revenue. There may be other revenue that you are receiving that you should consider when trying to calculate premium revenue to get to break even. a.

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The moral hazard is an important issue faced by the insurance firms while issuing the insurance to the people. Some people will insure their life as well as the wealth with the insurance companies and once they have taken the insurance policy, they will become very careless about their health conditions or about safekeeping their wealth. This means that the insured person will not be vigilant about the food ...

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