Question

When insurance companies establish policies for covering screening tests for diseases, one important factor is the value of the test predicting the disease. For example, for a certain type of disease, insurance companies may only cover the test costs if the test improves the prediction of having the disease by 90%. To help decide coverage policy for a new test, use the following data to help decide whether the test should be covered: Test Positive Test Negative Have Disease 11 2 Do Not Have Disease 30 120 14 a) Find P(A) = P(Having the disease among everyone) b) P(B) = P(Testing positive for everyone) c) Find P(A and B) = P(Having the disease and testing positive) . d) Find P(A | B) = P(Having the disease given tested positive) . e) Use the Bayes formula to determine P(A | B). f) Should the test be covered? What is your conclusion? Justify your answer

Answer 1

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