2012 Fall Q11 State WC Funds
I'm a bit confused on this question, as the response to profitability in answer 1 makes it sound like the govt subsidizes the private WC market, but I believe the WC market are charged actuarially sound rates. The expense provision makes sense to me (partnership = all private companies have expenses, competitive = state has lower expenses relative to private, exclusive = save on expenses). The availability also makes it sound like the state funds are subsidized. This may just be outdated but would like to confirm - thanks!
Comments
I believe you're referring to this answer:
Partner with private insurers:
Profitability – government is not likely to gain any profits. It will subsidize the
private insurers so they can charge equitable rates while earning normal level of
profit.
Partnership is not an option given for WC in the Germani text. Rather, they talk about residual market. There is no mention of the state subsidizing private insurers for WC. So, this answer is incorrect.
Such subsidizing is not mentioned in any of the other sample answers given.