Paula is 68 years old and has Medicare Part C coverage; she is enrolled in a Medicare Advantage plan offered by the Advantage Health Corporation (Corporation). Paula does not pay the federal government a monthly premium for Medicare Part A (most people dont). However, she is still required to pay to the federal government a $134 monthly fee for Part B (even if she is enrolled in Medicare Part C).

She also pays a monthly premium of $15 to the Corporation. The Corporation has a contract with the federal government to cover Paula. The federal government pays the Corporation a monthly capitation fee of $800 for Paulas coverage. Paula goes to the doctor once to get service. The total cost for the physicians service was $100; Paula pays a $20 co-pay to the physician, and the physician gets the remainder from the Corporation (on a fee-for-service basis).

Do the following:

(1) Draw a diagram explaining all the exchanges of money involved in the aforementioned scenario (related to health services or otherwise). Label each party, the directionality of the money, services, etc., and the exact amount associated with each exchange of money where possible.

(2) Identify the parties that bear economic risks. Assume that Paulas plan requires a deductible, an 80/20 co-insurance, and a maximum out-of-pocket limit.