[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 $363 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 $320. 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 Enrollment in Current Year 45,188 Projected Enrollment Next Year Average Monthly Cost in Current Year $ 11,147,372 10,059,132 8,436,324 48,477 5-14 81,956 84,163 15-19 95,373 95,387 20-24 65,746 67,382 9,538,924 25-34 132,996 132,054 26,431,708 35-44 166,376 174,946 38,881,608 45-54 84,996 90,389 22,741,436 55-64 98,724 101,423 28,691,212 65-74 155,788 161,059 49,517,644 75-84 67,395 71,965 33,432,260 85 years and older 22,999 1,017,537 26,349 1,053,594 24,285,975 $263,163,595 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 7% 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 $345. Calculate the new target cost assuming again that VIP-MD wants to maintain the same profit per enrollee as in the current year. Check my work