F IL E A ccording to th e National C oalition on Health Care, there has been a steady decline in th e p ro p o rtio n o f Am ericans w h o have health insurance. The rising insurance premiums have made it difficult for small employers to offer insurance and those that do offer insurance are contributing a smaller share of the premium. As a result, an increasing number of Americans do not have health insurance because they cannot afford it.

Consider a portion of data in the following table relating to insurance coverage (1 for coverage, 0 for no coverage) for 30 working individuals in Atlanta, Georgia. Also included in the table is the percentage of the premium paid by the employer and the individual's income (in $1,000s). The complete data set can be found on the text website, labeled Health Insurance.

Insurance Premium Percentage (in %) Income (in $1,000s)

1 0 88 0 0 60

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0 60 60

a. Analyze a linear probability model for insurance coverage with premium percentage and income used as the explanatory variables.

b. Consider an individual with an income of $60,000. What is the probability that she has insurance coverage if her employer contributes 50% of the premium? What if the employer contributes 75% of the premium?