A health insurance company charges policyholders a $2450 annual premium for health insurance for hospitalization.

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A health insurance company charges policyholders a $2450 annual premium for health insurance for hospitalization. The company estimates that each time a patient is hospitalized costs the company $3800. Furthermore, they have estimated that 85% of patients will not be hospitalized, 10% will be hospitalized once a year, and no one will be hospitalized more than twice.