Question

Suppose a study of 196 randomly sampled privately insured adults with incomes more than 200% of the current poverty level will be used to measure out of pocket medical expenses for prescription drugs for this income class.

a. Based on the sample data, construct a 95% confidence interval estimate for the mean annual pout of pocket expenditures on prescription drugs for the income class. Intrepret this interval.

b. The studys authors hope to use the information to make recommendations concerning insurance reimbursement guidelines and patient copayment recommendations. If the margin of error calculated in part a is considered to be too large for this purpose, what options area available to the studys authors?

Sample Data
Mean	167.5207653
Standard Deviation	28.5178574
Count	196

Answer 1

(A)

Mean (x_bar)	167.5207653
Standard Deviation(s)	28.5178574
Count(n)	196

z critical value for 95% confidence level is 1.96.

Confidence interval =

We are 95% confident that the true mean  pocket medical expenses for prescription drugs for adults with incomes more than 200% of the current poverty level is between 163.528 and 171.513

(B)  If the margin of error calculated in part a is considered to be too large for this purpose, then we can reduce the margin of error by increasing the sample size n. If we want to keep the sample size same,then we can reduce the margin of error by decreasing the confidence level.