Suppose two drugs are routinely used for the treatment of thyroid dysfunction. Drug X is known to cure the disorder 75% of the t
ime and costs $88. Drug Y is known to cure the disorder 60% of the time and costs $75. The two drugs work independent of each other. The two treatment plans are as
follows:
Plan A: Treatment with Drug X-if not effective treatment with Drug Y
Plan B: Treatment with Drug Yếif not effective, treatment with Drug X
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Select the correct answer.
From the perspective of an insurance company paying for the treatment, which is the best decision?
ОА.
Based on the overall probability of a cure, plan A should be selected over plan B.
ОВ.
Based on the overall probability of a cure, plan B should be selected over plan A.
OC. Based on the overall cost of treatment plan A should be selected over plan B.
OD
Based on the overall cost of treatment plan B should be selected over plan A.
This is because the chances that the company will prevent additional expenses on the treatment of the ailment is 75% which is higher than that of the other drug whose effectiveness is at best 40% less than the expected results and 15% reduced than drug A.
In other words, if the drug b is used first, there is an increased chance that the company will spend more money to treat the ailment.
