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* Suppose that managed care costs $3,000 per enrollee and FFS costs $4,000 per enrollee and each enrolls onehalf of the population. After a year, one-third of the population is enrolled in FFS and two-thirds in managed
care. Suppose sees their costs increase by 5 percent over the course of a year. At the end of the year, average
patient costs across both groups will have:

1. increased from $3,500 to $3,850.
2. increased from $3,000 to $3,300.
3. increased from $4,000 to $4,400.
4. stayed constant.

Before:
Average costs:
3000*0.5+4000*0.5=3500
After:
Average costs:
(3000*2/3+4000*1/3)*1.05=3500

The answer is option 4....

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