Required Information [The following Information applies to the questions displayed below.] VIP-MD is a health maintenance organization (HMO) located in North Carolina. Unlike the traditional fee-for-service model that determines the payment according to the actual services used or costs incurred, VIP-MD receives a fixed, prepaid amount from subscribers. The per member, per month rate (PMPM) is determined by estimating the health care cost per enrollee within a geographic location. The average health care coverage in North Carolina costs $376 per month, which is the same amount Irrespective of the subscriber's age. Because Individuals are demanding quality care at reasonable rates, VIP-MD must contain its costs to remain competitive. A major competitor, National Physicians, entered the North Carolina market early in the current year with a monthly premium of $333. VIP-MD wants to maintain its current market penetration and hopes to increase its enrollees in the current year. The latest data on the number of enrollees and the associated costs follow: Enrollment in Age 1-4 Current Year Year Projected Enrollment Next Average Monthly Cost in Current Year 46,488 49,777 $ 11,148,672 5-14 83,256 85,463 10,060,432 15-19 96,673 96,687 8,437,624 20-24 67,046 68,682 9,540,224 25-34 134,296 133,354 26,433,008 35-44 167,676 176,246 38,882,908 45-54 86,296 91,689 22,742,736 55-64 99,424 102,723 28,692,512 65-74 157,088 162,359 49,518,944 75-84 68,695 73,265 33,433,560 85 years and older 24,299 1,031,237 27,649 24,287,275 1,067,894 $ 263,177,895 Required: 1. Calculate the target cost required for VIP-MD to maintain its current market share and profit per enrollee in the current year. 2. Costs in the health care industry applicable to VIP-MD and National Physicians are expected to Increase by 8% In the coming year. VIP-MD is planning for the year ahead and is expecting all providers, including VIP-MD and National Physicians, to increase their rates by $25 to $358. Calculate the new target cost assuming again that VIP-MD wants to maintain the same profit per enrollee as in the current year. (For all requirements, do not round Intermediate calculations and round your answers to 2 decimal places.) 1. Required target cost 2. New target cost