Costs of insurance. If patient X believes he might have health care costs of $20,000 with a probablility of 0.25 or $10,000 with a probablility of 0.75 what is the actuarilly fair premium that covers costs for X?
b. Pt X buys an insurance with a $500 deductible and 20% coinsurance rate. If pt X has expenses of $4,000 how much will the reimbursement be?
Please assist by showing how to solve these two problems
A)Fair premium = Expected value of health ...
Costs of insurance are explicated.