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Question

The monthly Medicare Part B healthcare premium for most beneficiaries ages 6565 and older has increased significantly since 1975. The monthly premium has increased from about $7\$ 7 in 1975 to $110.50\$ 110.50 in 2011. The following exponential function models the premium increases:

M(x)=7(1.080)x,M(x)=7(1.080)^x,

where xx is the number of years since 1975. Estimate the monthly Medicare Part B premium in 1985, 1992, and 2002. Round to the nearest dollar.

Solution

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Answered 1 year ago
Answered 1 year ago
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By substituting in the function

M(x)=7(1.080)x\begin{aligned} M\left(x\right)=7\cdot\left(1.080\right)^x \end{aligned}

, for the values x=10,17x=10,17, and x=27x=27, respectively, where xx represents the number of years since 19751975, the following is true:

M(10)=7(1.080)10=72.158925=15.112475$15M(17)=7(1.080)17=73.7=25.9$26M(27)=7(1.080)27=77.988=55.916$56\begin{aligned} M\left(\textcolor{#4257b2}{10}\right)&=7\cdot\left(1.080\right)^{\textcolor{#4257b2}{10}}\\ &=7\cdot2.158925\\ &=15.112475\\ &\approx\$15\\ M\left(\textcolor{#4257b2}{17}\right)&=7\cdot\left(1.080\right)^{\textcolor{#4257b2}{17}}\\ &=7\cdot3.7\\ &=25.9\\ &\approx\$26\\ M\left(\textcolor{#4257b2}{27}\right)&=7\cdot\left(1.080\right)^{\textcolor{#4257b2}{27}}\\ &=7\cdot7.988\\ &=55.916\\ &\approx\$56 \end{aligned}

Therefore, the monthly Medicare Part B premium in 19851985 was $15\$15, in 19921992 was $26\$26, and in 20022002 was $56\$56.

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