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 $373 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 $330. 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 4554 5564 65-74 7584 85 years and older Enrollment in Current Year 46,188 82,956 96,373 66,746 133,996 167,376 85,996 99,724 156, 788 68,395 23,999 1,028,537 Projected Enrollment Next Year 49,477 85,163 96,387 68, 382 133,054 175,946 91,389 102, 423 162,059 72,965 27,349 1,064,594 Average Monthly Cost in Current Year $ 11, 148, 372 10,060,132 8,437, 324 9,539, 924 26, 432,708 38,882,608 22,742,436 28,692,212 49,518,644 33,433,260 24,286,975 $ 263, 174,595 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 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 $355. 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.) (For all requirements, do not round intermediate calculations and round your answers to 2 decimal places.) 1. Required target cost 2. New target cost