You work at an organization that offers health care policies. The company first

Question

You work at an organization that offers health care policies. The company first checks all applicants to see if they are eligible for any government programs and then offers advice on which policy/program is most beneficial to them (government and/or private) Given the following information, draw a joint probability table. Enter all answers on this exam using 4 decimal places with a 0 leading the decimal. All probabilities are independent. Variables are type of policy and level of coverage. Your company considers the type of policy: Customers are rated as eligible for Medicaid (20%), Patient Protection and Affordable Care Act (PPACA) (16%), or private policies based on their income and/or disability. You then sell these policies based on the level of coverage that the person is interested in: Minimal coverage - catastrophic only with a high co-pay (45%): Medium coverage with a moderate co-pay (30%); and full coverage - includes elective procedures and psychiatric coverage with a small co-pay. 1 what is the probability of a customer being interested in full coverage? 2. what is the probably of being a customer who s wanting Medium coverage and eligible for PPACA?

Explanation / Answer

The required probability is (100-45-30) % = 25 % or 1/4

This is due to the fact that there are only three coverages, so if we subtract probabilities of catastrophic and medium coverage from 1 we get the probability of full coverage

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