1. An insurance market consists of high-risk patients, who average $40,000 in spending per year, and low-risk patients, who average $1,000 per year. Overall, low-risk patients represent 90 percent of the population. What would average spending be for a population like this?

2. Refer to the box titled “Steering Patients to Less Expensive Providers” in this chapter. What would happen in the market for colonoscopies with a reference price of $500? What would happen in the market for colonoscopies with a reference price of $25?

3. Why would a system like John Muir Health launch a medical home that is intended to reduce its revenues?

4. What risk does a health system bear when it agrees to a bundled payment?