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 witl'lin a geographic location. The average health care coverage in North Carolina costs $372 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 $329. 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 Average Monthly Enrollment in Enrollment Cont: in Current: Age Current Your Next Year Yen: 14 46,033 43,377 3 11,143,272 514 32,356 35,063 13,063,032 1519 96,233 96,233 3,437,224 2324 66,646 63,232 9,539,324 2534 133,396 132,954 26,432,603 3544 167,236 1T5,346 33,332,503 4554 35,396 91,239 22,342,336 5564 99,324 102,323 23,692,112 6574 156,633 161,959 43,513,544 7534 63,295 32,365 33,433,163 35 years and older 23,399 27,249 24,236,335 1,023,631' 1,063,494 $263,133,495 [ Required: 1. Calculate the target cost required for VIP-MD to maintain its current market share and prot 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 5% 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 $354. Calculate the new target cost assuming again that VIP-MD wants to maintain the same prot per enrollee as in the current year. {For all requirements, do not round intermediate calculations and round your answers to 2 decimal places.)