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 $364 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 $321. 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: Age 1-4 5-14 15-19 20-24 25-34 35-44 45-54 55-64 65-74 75-84 85 years and older Enrollment in Current Year 45, 288 82,056 95,473 65,846 133,096 166,476 85,096 98,824 155,888 67,495 23,099 Projected Enrollment Average Monthly Cost in Next Year Current Year 48,577 $ 11,147, 472 84,263 10,059, 232 95,487 8,436,424 67,482 9,539, 024 132,154 26,431,808 175,046 38,881,708 90,489 22,741,536 101,523 28,691,312 161, 159 49,517,744 72,065 33,432,360 26,449 24,286, 075 1,054,694 $ 263, 164,695 1,018,637 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 $346. 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