perseverant
Doctor: Health Maintenance Organizations (HMOs) should not be used to replace traditional fee-for-service methods of delivering health care. The less health care that HMOs deliver, the greater the profit these companies receive. Accordingly, there is a perverse incentive for these companies to deliver very little health care, regardless of the ill patient's needs.
Which of the following, if true, casts the most doubt on the doctor's conclusion?
(A) Doctors are paid less by HMOs than they receive under a fee-for-service system, which allows HMOs to charge less for the service they provide.
(B) An effective way for HMOs to cut health care delivery costs is to prevent diseases from occurring by providing considerable amounts of preventive health care.
(C) If HMOs deliver less health care, competitive pressures will force these companies to lower the rates they charge for health care coverage, returning the profit margin to former levels.
(D) Fee-for-service methods of delivering health care have perverse incentives to provide unnecessary health care at inflated costs.
(E) HMOs are the only proven way to reduce the high health care costs produced by a fee-for-service system without governmental interference.
I could not get the rigth answer for this question, this came up in a kaplan exam. I also dont understand the explanation. Could someone pick the best answer and explain how to get to it. I will be posting the answer later.
The less health care that HMOs deliver, the greater the profit these companies receive.
So there is an incentive for these companies to deliver very little health care, regardless of the ill patient's needs.
Conclusion: HMOs should not replace fee-for-service methods.
We need to weaken the conclusion.
(A) Doctors are paid less by HMOs than they receive under a fee-for-service system, which allows HMOs to charge less for the service they provide.
Irrelevant. The problem is that HMOs have an incentive (greater profit) to give less than adequate health care.
(B) An effective way for HMOs to cut health care delivery costs is to prevent diseases from occurring by providing considerable amounts of preventive health care.
This tells us that they can reduce health care delivery costs by providing considerable preventive health care. What are the costs of providing preventive health care, we don't know. How profits get impacted, we don't know. Are HMOs equipped to provide preventive health care we don't know. Are they providing preventive health care, we don't know.
(C) If HMOs deliver less health care, competitive pressures will force these companies to lower the rates they charge for health care coverage, returning the profit margin to former levels.
Our argument is based on the incentive that the HMOs have to provide less than adequate health care - profits. This tells us that they will not get any extra profits. This means the incentive will not work and hence, HMOs may not be a bad deal. Correct.
(D) Fee-for-service methods of delivering health care have perverse incentives to provide unnecessary health care at inflated costs.
The pitfalls of fee-for-service are out of scope. We don't know what is worse - HMO providing less than necessary health care or fee-for-service providing unnecessary health care.
(E) HMOs are the only proven way to reduce the high health care costs produced by a fee-for-service system without governmental interference.
Irrelevant.
Answer (C)