In our study, we studied the relationship between the health insurance coverage, the medical expenses, the population and the geographical position.
From our background information, we know that insurance rate can varied in different kind of areas. Then in what kind of regions, will more people buy insurance than other places? Are the population density positively correlated to the insurance-purchasing behaviour? Or the medical cost acts as the same way? These informations can be really helpful for an insurance company to cut down their administrative cost. If insurance companies can relatively estimates their revenue by knowing how much people are willing to purchase health insurance in one region, they might relocated their resources accordingly to minimize the administrative cost. In other word, if the insurance company could gain information about certain featured population and insured rate, they can prevent many over-investing in advertising resources in many locations. The companies can use this money on lowering their products price so that more people will be willing to purchase cheaper insurance plans and safeguard their family’s financial future. From the perspective of the development of the insurance company, if we discovered the trend that the three factors we want to examine (geographical region, population and hospital expenditure) are not independent with the insurance coverage, the insurance company could benefit heavily from these informations in terms of campaign strategies and advertisement distribution. They can find those niche groups that fit in the demographic features of a highly insured group but have a low insurance coverage in reality to be their target audience for insurance product. The result from our study, if statistically significant, could benefit the insurer and the insuree in the US as a whole.