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 $378 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 $335. 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: Projected Enrollment in Current Year Enrollment Next Average Monthly Cost Year in Current Year 1-4 5-14 15-19 20-24 25-34 35-44 45-54 55-64 65-74 75-84 85 years and older 46,688 83,456 96,873 67,246 134,496 167,876 86,496 99,224 157,288 68,895 24,499 1,033,037 49,977 85,663 96,887 68,882 133, 554 176,446 91,889 102,923 162,559 73,465 27,849 1,070,094 S 11,148,872 10,060,632 8,437,824 9,540,424 26,433,208 38,883,108 22,742,936 28,692,712 49,519,144 33,433,760 24,287,475 S 263,180,095 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 6% 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 $360. 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 end round your answers to 2 decimal places.) 1. Required target cost 2. New target cost