When insurance companies establish policies for covering screening tests for diseases, one important factor is the value of the test predicting the disease.

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. What is your conclusion? Justify your answer.

Expert Solution

P(A) = (24+5)/(24+5+9+104) = 0.204

P(A|B) = 24/(24+9) = 0.727

The percent increase from P(A) to P(A|B) is:

= (0.727-0.204)/0.204 * 100

= 256% which is greater than 90%.

Thus, the test should be covered.

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orchestra answered 2 years ago

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