Health insurance benefits vary by the size of the company (the Henry J. Kaiser Family Foundation website, June 23, 2016). The sample data below show the number of companies providing health insurance for small, medium, and large companies. For the purposes of this study, small companies are companies that have fewer than employees. Medium-sized companies have to employees, and large companies have or more employees. The questionnaire sent to employees asked whether or not the employee had health insurance and then asked the enployee to indicate the size of the company.
|Size of Company||Yes||No||Total|
a. Conduct a test of independence to determine whether health insurance coverage is independent of the size of the company. What is the -value?
Compute the value of the test statistic (to 2 decimals).
The -value is - Select your answer -less than .005between .005 and .01between .01 and .025between .025 and .05between .05 and .10greater than .10
Using level of significance, what is your conclusion?
- Select your answer -Cannot reject the assumption that health insurance coverage and size of the company are independentConclude health insurance coverage is not independent of the size of the company
b. A newspaper article indicated employees of small companies are more likely to lack health insurance coverage. Calculate the percentages of employees without health insurance based on company size (to the nearest whole number).
Based on the percentages calculated above, what can you conclude?
- Select your answer -
Large companies have a higher percentage of no coverage than medium and small companies
Medium companies have a higher percentage of no coverage than large and small companies
Small, medium, and large companies all have roughly the same percentage of no coverage
Small companies have a higher percentage of no coverage than large and medium companies
For the given data, the chi-square test for association is appropriate.
H0: The health insurance coverage is independent of the size of the company.
H1: The health insurance coverage is not independent of the size of the company.
Chi-square test is appropriate in this situation.
If p-value ≤ α, then reject the null hypothesis. Otherwise, do not reject the null hypothesis.
Procedure for calculating chi-square test statistic using MegaStat:
From the MegaStat output, the chi-square test statistic is 14.46 which is given below:
From the output,
Chi-square is 14.46.
Degree of freedom is 2.
The p-value is 0.0007. The p-value is less than 0.005.
Assume the level of significance is 0.05.
Here, p-value is 0.0007, which is less than the level of significance (0.05). Thus, reject the null hypothesis. Thus, it can be conclude that health insurance coverage is not independent of the size of the company.
The percentages of employees without health insurance based...
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