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# A government agency that reimburses its clients for bills

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Manager
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A government agency that reimburses its clients for bills  [#permalink]

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28 Oct 2010, 01:58
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Question Stats:

68% (01:42) correct 32% (01:58) wrong based on 823 sessions

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A government agency that reimburses its clients for bills they have paid for child care has had this year’s budget cut. To save money without cutting reimbursements or otherwise harming clients financially, it plans to delay reimbursements to clients for forty days, thereby earning 180 million per year in interest on the reimbursement money.

Which of the following, if true, is the best criticism of the agency’s plan?

(A) Daycares typically hold parents responsible for the ultimate payment of their bills.
(B) The agency cannot save money by cutting staff because it is already understaffed.
(C) Some clients borrow money to pay their daycare bills and they will pay forty extra days of interest on these loans.
(D) Some clients pay their daycare bills immediately, but they often taken more than forty days to file with the agency for reimbursement.
(E) The agency’s budget was cut by more than \$180 million last year.
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28 Oct 2010, 03:09
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IMO C.
Critic will most try to find a flaw here.

Since agency claims that delaying reimbursements will help the agency earn money, claim C says the reverse.
Interest means extra charge. Lets say, if a person actually had to pay 100\$, due to the interest, he will now claim for (100\$+interest amount say 10\$ = 110\$) thus more money will be claimed. Hence this is the best argument against the agency's claim.
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28 Oct 2010, 16:07
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feruz77 wrote:
A government agency that reimburses its clients for bills they have paid for child care has had this year’s budget cut. To save money without cutting reimbursements or otherwise harming clients financially, it plans to delay reimbursements to clients for forty days, thereby earning 180 million per year in interest on the reimbursement money.

Which of the following, if true, is the best criticism of the agency’s plan?

(A) Daycares typically hold parents responsible for the ultimate payment of their bills.
(B) The agency cannot save money by cutting staff because it is already understaffed.
(C) Some clients borrow money to pay their daycare bills and they will pay forty extra days of interest on these loans.
(D) Some clients pay their daycare bills immediately, but they often taken more than forty days to file with the agency for reimbursement.
(E) The agency’s budget was cut by more than \$180 million last year.

The answer is C because of the portion I've highlighted above. If C is true, the plan *will* harm clients financially, so the plan will not achieve one of its goals.
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10 Nov 2010, 13:20
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I understand why C is correct. It was my first choice..

But I don't understand why E is wrong!! If the budget is cut by more than 180 million, the plan will not work anyway..no?

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16 Nov 2010, 10:00
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@maive, it's great that C was your first choice and that you got this one correct! The problem with E is that it doesn't have any to do with causing financial harm to clients.

We're specifically told in the argument that the purpose of the plan is to avoid cutting reimbursements or harming clients financially. Even if the budget was cut by more than \$180 million last year (the amount that they expect to earn back in interest with the new plan), there are still other things the agency could to save money without harming clients financially (cut employee salaries, move into cheaper office space, etc.)

Only answer choice C states that the forty-day delay will cause financial harm to some clients, so that's the best criticism of the plan.

Hope that helps!
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09 Dec 2010, 05:34
Quote:
maive:- But I don't understand why E is wrong!! If the budget is cut by more than 180 million, the plan will not work anyway..no?

I believe this is since E is not dampening the main concerns. The stated main concerns are- not to harm clients financially and cost cutting.
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Re: A government agency that reimburses its clients for bills  [#permalink]

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30 Jan 2014, 22:01
How can we assume that the government will pay for the interest (as per option C) when the premise states "A government agency that reimburses its clients for bills they have paid for child care". It says only bills not about the interest on the another loan taken in the mean time.

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Re: A government agency that reimburses its clients for bills  [#permalink]

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31 Jan 2014, 06:57
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email2vm

you have not understood option "c'' correctly........
what it means is as follows....

- I incur \$1000 on medical expenses and take a loan for payment of same.......
- After 40 days i am reimbursed \$ 1000 by the government agency.....which i use to repay my loan... but the borrower asks for \$ 1100 (loan amount + interest on loan)
- I have to pay additional \$ 100 from my pocket.....hence the argument that no affect of the new system accrues on the me ( ie citizen) is incorrect.....

HENCE "C" CORRECT....

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Re: A government agency that reimburses its clients for bills  [#permalink]

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17 Mar 2015, 20:39
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Type weaken

Conclusion: delay in reimbursments would not harm clients financially.

Assumption: delay in reimbursments would not harm clients financially.

Weaken the assumption: Reimbursment harm the financial status of clients somehow

A government agency that reimburses its clients for bills they have paid for child care has had this year’s budget cut. To save money without cutting reimbursements or otherwise harming clients financially, it plans to delay reimbursements to clients for forty days, thereby earning 180 million per year in interest on the reimbursement money.
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Re: A government agency that reimburses its clients for bills  [#permalink]

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19 Nov 2015, 01:21
IanStewart wrote:
feruz77 wrote:
A government agency that reimburses its clients for bills they have paid for child care has had this year’s budget cut. To save money without cutting reimbursements or otherwise harming clients financially, it plans to delay reimbursements to clients for forty days, thereby earning 180 million per year in interest on the reimbursement money.

Which of the following, if true, is the best criticism of the agency’s plan?

(A) Daycares typically hold parents responsible for the ultimate payment of their bills.
(B) The agency cannot save money by cutting staff because it is already understaffed.
(C) Some clients borrow money to pay their daycare bills and they will pay forty extra days of interest on these loans.
(D) Some clients pay their daycare bills immediately, but they often taken more than forty days to file with the agency for reimbursement.
(E) The agency’s budget was cut by more than \$180 million last year.

The answer is C because of the portion I've highlighted above. If C is true, the plan *will* harm clients financially, so the plan will not achieve one of its goals.

What category does this come under like cause and effect or alternate cause or numbers and percentage. I cant seem to see what pattern this fall under?
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Re: A government agency that reimburses its clients for bills  [#permalink]

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19 Nov 2015, 02:03
Quote:
What category does this come under like cause and effect or alternate cause or numbers and percentage. I cant seem to see what pattern this fall under?

I think this is a weaken question.
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Re: A government agency that reimburses its clients for bills  [#permalink]

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26 Oct 2016, 01:18
I was struggling to choose between C and D.
can anyone help me to explain why D is wrong?
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A government agency that reimburses its clients for bills  [#permalink]

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29 Oct 2016, 09:23
tanzzt wrote:
I was struggling to choose between C and D.
can anyone help me to explain why D is wrong?

In option D it is implied that the clients already had money to pay the bills. Since they did not have to take loan to pay the bills, it does not matter whether there is a delay of 40 days in getting the payment because they do not have to pay interest on the money and their net cash flow is 0. They pay x for the bill, and receive x as reimbursement.

Option C clearly shows a loss for the client. They pay the bill x plus the interest on x, but get reimbursement of only x. So net cash out flow is the interest. Therefore option C is better since it shows that the government's intention of not harming the clients financially is not achieved.
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Re: A government agency that reimburses its clients for bills  [#permalink]

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31 May 2017, 11:51
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C is correct choice.

We're specifically told in the argument that the purpose of the plan is to avoid cutting reimbursements or harming clients financially. Even if the budget was cut by more than \$180 million last year (the amount that they expect to earn back in interest with the new plan), there are still other things the agency could to save money without harming clients financially (cut employee salaries, move into cheaper office space, etc.)

Only answer choice C states that the forty-day delay will cause financial harm to some clients, so that's the best criticism of the plan.
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Re: A government agency that reimburses its clients for bills  [#permalink]

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04 Jul 2019, 01:32
feruz77 wrote:
A government agency that reimburses its clients for bills they have paid for child care has had this year’s budget cut. To save money without cutting reimbursements or otherwise harming clients financially, it plans to delay reimbursements to clients for forty days, thereby earning 180 million per year in interest on the reimbursement money.

Which of the following, if true, is the best criticism of the agency’s plan?

(A) Daycares typically hold parents responsible for the ultimate payment of their bills.
(B) The agency cannot save money by cutting staff because it is already understaffed.
(C) Some clients borrow money to pay their daycare bills and they will pay forty extra days of interest on these loans.
(D) Some clients pay their daycare bills immediately, but they often taken more than forty days to file with the agency for reimbursement.
(E) The agency’s budget was cut by more than \$180 million last year.

OFFICIAL EXPLANATION:

With a view to offset the budgetary cut that it had faced, the government agency plans to earn an interest of \$180 million a year through a deliberate delay in the reimbursement of daycare expenses to its clients by forty days.

It claims that, by implementing this plan, it would neither cut reimbursements nor otherwise harm its clients financially.

We have been asked to identify that choice which can be described as the best criticism of the agency’s plan.

Since the agency’s claim is that its plan will neither result in cutting reimbursements nor otherwise harming its clients financially, we should look for that choice which implies either that the reimbursement is in fact reduced, or that the clients are otherwise financially harmed by this plan.

The first sentence of the passage specifically states that the schemes of reimbursement means that the clients have to first pay the bills to the daycares, and only later can claim reimbursement from the government agency. So, (A) states the obvious, and is not relevant in evaluating the effect of the delay in reimbursement by 40 days. So, (A) is not the answer.

(B) means that the agency is not in a position to save on its administrative costs. This, if true, will justify, and weaken, the agency’s plan to make savings through other means such as a deliberate delay in making reimbursements and earning interest thereby. So, (B) is not the answer.

(C) means that these clients will be financially harmed by the planned delay by the government agency in reimbursing their claims, thereby contradicting its claim that the plan would not harm its clients financially. So, (C) would be the best criticism of the agency’s plan, and is the answer.

(D) only means that, in respect of such delayed claims, the agency has already been benefiting by interest-earning.

Therefore (D), by itself, does not constitute a criticism of the agency’s present plan to delay reimbursement of claims by another forty days.

The given passage does not claim that the interest of \$180 million earned by the deliberate delay in the reimbursement of claims was intended to cover the budget cut fully. So, (E) even if it is true, is not a valid criticism of the agency’s plan.
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Re: A government agency that reimburses its clients for bills   [#permalink] 04 Jul 2019, 01:32
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