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NEW QUESTION: 1
The Fiesta Health Plan prices its products in such a way that the rates for its products are reasonable, adequate, equitable, and competitive. Fiesta is using blended rating to calculate a premium rate for the Murdock Company, a large employer. Fiesta has assigned a credibility factor of 0.6 to Murdock. Fiesta has also determined that Murdock's manual rate is $200 PMPM and that Murdock's experience rate is $180 PMPM.
According to regulations, Fiesta's premium rates are reasonable if they
A. are at a level that balances Fiesta's need to generate a profit against its need to obtain or retain a specified share of the market in which it conducts business
B. vary only on the factors that affect Fiesta's costs
C. do not exceed what Fiesta needs to cover its costs and provide the plan with a fair profit
D. are high enough to ensure that Fiesta has enough money on hand to pay operating expenses as they come due