Once HMOs were initiated, Amy and Becky decided to switch to HMOs. The Medicare program will pay the HMO 90% of the "average costs of those who remain the Medicare" for every individual who leaves and enrolls in the HMOs. Below presents the costs to the government. PatientTraditional MedicareMedicare Plus HMOsAmy10001000Becky20002000Carols30003000Donny400040001. Calculate the average cost per individual who remains in Medicare. $ 2. How much does the government need to pay to the HMOs for Amy and Becky? $ 3. The total cost to the government with HMO is 4. The total cost to the government BEFORE HMO is $

Cost: It refers to the price of goods and services that has to be paid in the market. The more the cost of the goods and services the less will be the consumption. The cost of goods and services is the price that is present in the market. The cost is the actual money that firms invest on any product. 1. The average cost per individual has to pay will be the amount to be paid on average basis. As there are 4 people and the average cost for the same will be 2500. This is the amount that has to be paid on the average basis to be remain in the Medicare scheme. The people must have this amount so that they can enjoy the benefits of medical facility. 2. The government need to pay different amounts to both the individuals. As the Medicare taken by them is different and the amount paid to them will be different. Amy will get the $900 and Becky will get $1800 from the government. The amount paid to them is around 90% of the medical benefits they are availing. 3. The total cost paid by the government is the 90% of the total benefits. The government will have to pay $9000 in total as the part of their cost. The government has to pay this amount because they comes under the scheme of the government. The government will help its individual to be fit and healthy. Hence, it is the amount that government must try to pay so that everyone can avail same facilities.

Answered: Once HMOs were initiated, Amy and Becky…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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Once HMOs were initiated, Amy and Becky decided to switch to HMOs.

The Medicare program will pay the HMO 90% of the "average costs of those who remain the Medicare" for every individual who leaves and enrolls in the HMOs. Below presents the costs to the government.

Patient	Traditional Medicare	Medicare Plus HMOs
Amy	1000	1000
Becky	2000	2000
Carols	3000	3000
Donny	4000	4000

1. Calculate the average cost per individual who remains in Medicare. $

2. How much does the government need to pay to the HMOs for Amy and Becky? $

3. The total cost to the government with HMO is

4. The total cost to the government BEFORE HMO is $

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