QUESTION: 77 Exam Topic: 1, Volume A

A product is often described as having a thin margin or a wide margin. With regard to the factors that help determine the size of the margin of a health plan's product, it can correctly be stated that the

greater the risk a health plan assumes in a health plan, the thinner the product margin should be
more that competition acts to force prices down, the wider the product margins tend to become
greater the demand for the product, the thinner the margin for this product tends to become
longer the premium rates are guaranteed to a group, the wider the health plan's margin should be

Answer(s): D

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QUESTION: 78 Exam Topic: 1, Volume A

One true statement about a health plan's underwriting margin is that

the only way that the health plan can effectively reduce its exposure to underwriting risk, and therefore adjust its underwriting margin, is to control anti selection
a larger assumed underwriting margin will reduce the price of the health plan's product and will make the plan more competitive
the health plan's purchase of stop-loss insurance has no effect on its underwriting margin because stop-loss insurance can help the health plan control its expenses but not its underwriting risk
both the level of underwriting risk that the health plan assumes in providing benefits and the market competition it encounters most likely directly affect the size of its assumed underwriting margin

Answer(s): D

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QUESTION: 79 Exam Topic: 1, Volume A

For each of its products, the Wisteria Health Plan monitors the provider reimbursement trend and the residual trend. One true statement about these trends is that

The provider reimbursement trend probably is more difficult for Wisteria to quantify than is the residual trend
Wisteria's residual trend is the difference between the total trend and the portion of the total trend caused by changes in Wisteria's provider reimbursement levels
The residual trend most likely has more impact on Wisteria's total trend than does the provider reimbursement trend
An example of a residual trend would be a 5% increase in the capitation rate paid to a PCP by Wisteria

Answer(s): B

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QUESTION: 80 Exam Topic: 1, Volume A

One true statement about the rate ratios used by a health plan is that the

End result of a typical family rate ratio is that the health plan's family rate is subsidized by its single premium rate
health plan cannot arbitrarily increase or decrease its rate ratio for a rate category
rate ratios used by the health plan most likely have been established by government regulations
health plan should determine its rate ratios by considering family size alone rather than competitive factors such as the ratios that competitors are using

Answer(s): A

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QUESTION: 77 Exam Topic: 1, Volume A

QUESTION: 78 Exam Topic: 1, Volume A

QUESTION: 79 Exam Topic: 1, Volume A

QUESTION: 80 Exam Topic: 1, Volume A