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In a certain country, insurance companies pay only a fixed percentage

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In a certain country, insurance companies pay only a fixed percentage [#permalink]

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In a certain country, insurance companies pay only a fixed percentage – set by law and uniform across all insurance companies – of the fees actually billed by healthcare providers. Patients without insurance coverage, however, are legally responsible for the full amount of those fees. If the fixed percentage set for insurance companies is changed, healthcare providers will adjust their fees so that the insurance companies pay the same dollar amount that they would have paid before the change.

The information given most strongly supports which of the following general claims about the country described?

(A) If the percentage prescribed by law for insurance companies is decreased, private patients without insurance coverage will pay more for healthcare services.

(B) The dollar amount paid by insurance companies to healthcare providers will not change unless the legally specified percentage is changed.

(C) If the number of patients without insurance coverage grows beyond the number of patients covered by insurance, healthcare providers will adjust their billing practices according to the needs of those patients.

(D) If an economic recession causes the healthcare industry to suffer, the legally prescribed percentage paid by insurance companies will be increased.

(E) Acquiring insurance coverage, if possible, would be a sound economic decision for any patient.
[Reveal] Spoiler: OA

Last edited by hazelnut on 24 Sep 2017, 00:25, edited 2 times in total.
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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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Tough question but A is best choice.

In a certain country, insurance companies pay only a fixed percentage – set by law and uniform across all insurance companies – of the fees actually billed by healthcare providers. Patients without insurance coverage, however, are legally responsible for the full amount of those fees. If the fixed percentage set for insurance companies is changed, healthcare providers will adjust their fees so that the insurance companies pay the same dollar amount that they would have paid before the change.

The information given most strongly supports which of the following general claims about the country described?

A) If the percentage prescribed by law for insurance companies is decreased, private patients without insurance coverage will pay more for healthcare services.
Best choice. If the percentage is decreased the price must be going up! Therefore people with no insurance will pay more. Example. Right now the law states you pay 20% of a bill of $1000 =$200 and no insurance you pay $1000. For the amount to stay the same with a decrease in percentage price must go up.Therefore, 10% of x =$200. X must be $2000 and the non insured must pay $2000.
B) The dollar amount paid by insurance companies to healthcare providers will not change unless the legally specified percentage is changed.
Wrong this could change in many ways, think of a few.
C) If the number of patients without insurance coverage grows beyond the number of patients covered by insurance, healthcare providers will adjust their billing practices according to the needs of those patients.
The statement says nothing about this. They most likely will not as they do not seem to care about people without insurance coverage.
D) If an economic recession causes the healthcare industry to suffer, the legally prescribed percentage paid by insurance companies will be increased.
Does not say anything about this and cannot be inferred.
E) Acquiring insurance coverage, if possible, would be a sound economic decision for any patient.
Most likely, yes but it could not be. What if We get health insurance but never use it. Cannot be inferred.
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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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good question
i will go with A: If the percentage prescribed by law for insurance companies is decreased, private patients without insurance coverage will pay more for healthcare services.

reasoning: let us say that initially the prescribed % is 10% of fees that is paid by insurance .so insurance company will pay 10$ in a 100$ bill .now if this % is reduced to 5% then the doctors will increase the bill to 200 $ in order to make sure that the insurance company pay the same dollar bill of 10$ . so now the uninsured people will pay 200$ instead of 100$, an increased amount !!

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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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New post 18 Aug 2015, 12:58
In a certain country, insurance companies pay only a fixed percentage of the fees actually billed by healthcare providers; the remaining balance is waived.

Patients without insurance coverage will pay the full amount of those fees.

If the fixed percentage set for insurance companies is changed, healthcare providers will adjust their fees so that the insurance companies pay the same dollar amount that they would have paid before the change.

The information given most strongly supports which of the following general claims about the country described?


a) If the percentage prescribed by law for insurance companies is decreased, private patients without insurance coverage will pay more for healthcare services.

b) The dollar amount paid by insurance companies to healthcare providers will not change unless the legally specified percentage is changed.(the dollar will not change because of adjustment even if the fixed percentage is changed. This is exactly opposite.)

c) If the number of patients without insurance coverage grows beyond the number of patients covered by insurance, healthcare providers will adjust their billing practices according to the needs of those patients.

d) If an economic recession causes the healthcare industry to suffer, the legally prescribed percentage paid by insurance companies will be increased.(new information-cannot be informed)

e) Acquiring insurance coverage, if possible, would be a sound economic decision for any patient.(out of scope)

We can easily take eliminate options D and E.
I am confused between options A, B and C.
Please explain.
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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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[quote="Mechmeera"]In a certain country, insurance companies pay only a fixed percentage of the fees actually billed by healthcare providers; the remaining balance is waived.

Patients without insurance coverage will pay the full amount of those fees.

If the fixed percentage set for insurance companies is changed, healthcare providers will adjust their fees so that the insurance companies pay the same dollar amount that they would have paid before the change.

The information given most strongly supports which of the following general claims about the country described?


a) If the percentage prescribed by law for insurance companies is decreased, private patients without insurance coverage will pay more for healthcare services.

b) The dollar amount paid by insurance companies to healthcare providers will not change unless the legally specified percentage is changed.(the dollar will not change because of adjustment even if the fixed percentage is changed. This is exactly opposite.)

c) If the number of patients without insurance coverage grows beyond the number of patients covered by insurance, healthcare providers will adjust their billing practices according to the needs of those patients.

d) If an economic recession causes the healthcare industry to suffer, the legally prescribed percentage paid by insurance companies will be increased.(new information-cannot be informed)

e) Acquiring insurance coverage, if possible, would be a sound economic decision for any patient.(out of scope)

We can easily take eliminate options D and E.
I am confused between options A, B and C.
Please explain.[/quote

If the fixed percentage set for insurance companies is changed, healthcare providers will adjust their fees so that the insurance companies pay the same dollar amount that they would have paid before the change.

This means-
1. if the percentage is decreased , then the hospitals will increase the bill amount in $ so that they end up receiving the same amount of $ money.

2. if the percentage is increased, then the hospitals will decrease the bill amount in $ so that they end up receiving the same amount of $ money.

The ones WITHOUT insurance will pay the FULL AMOUNT in any case because it is clearly stated that Patients without insurance coverage will pay the full amount of those fees.
in situation 1, the ones without insurance will end up paying MORE $$$.

A deals with situation 1.

Your analysis of option B looks correct.

C uses the STRONG word WILL and we have no information to determine with certainty to evaluate the situation stated in option C.

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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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New post 03 Feb 2016, 19:28
WaterFlowsUp wrote:
Say now insurance pays 70%
For a bill of 100
Insurance bears 70
Patients bears 30

Now if insutance descreases its percentage to 50%
Then for 100 bill healthcare will charge 140
So insurance bears 70
Patient bears 70

So A


I don't think your analysis is right. if a patient has insurance coverage, then the insurance for ex. will pay 70, and rest will be waived, while a patient without insurance will have to pay 100.
if by law it is decreased the percentage, then for ex. 50 is paid by insurance, and 50 waived. while the non-insured will have to pay in full. Of course, the HC providers would not want this to happen, and most likely would increase the prices so that to be paid at least as much as they were paid before. this information can be inferred from the last sentence.
I was actually looking for an answer that would tell that: in case the percentage is increased, people without insurance would pay less. But A works here fine too.

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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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New post 03 Feb 2016, 20:11
IMO A,

Here is my thought:

Firstly we need to understand what the questions is trying to tell.

Assume that, current % of fees paid by insurance companies = 10%
So for a bill of 100, the insurance companies will have to pay 10 while people who are not covered by insurance will have to pay entire amount of 100.

Lets say the government changes the rules and decreases the percent from 10% to 5%.
Now here is the tricky part, the argument establishes that no matter what the percent is, the healthcare providers will adjust their fees such that they collect same amount as before from the insurance companies.

For instance, a patient that was billed earlier for 100 (as explained above), will now be charged in the following way,
5% of 'X' = 10 (X is new bill amount) --> notice that amount paid by insurance companies is kept constant at 10.

By this logic, the new bill amount will be 200.

This is exactly what option A suggests.

If the percentage prescribed by law for insurance companies is decreased (from 10% to 5%), private patients without insurance coverage will pay more (200 instead of 100) for healthcare services.
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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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New post 12 Aug 2016, 09:02
In a certain country, insurance companies pay only a fixed percentage – set by law and uniform across all insurance companies – of the fees actually billed by healthcare providers. Patients without insurance coverage, however, are legally responsible for the full amount of those fees. If the fixed percentage set for insurance companies is changed, healthcare providers will adjust their fees so that the insurance companies pay the same dollar amount that they would have paid before the change.

so lets say 10% changed to 20%
in both cases

10% * fee1 = 20% fee2

if in 1st case healthcare fee is 100, in second case it would be 50.


The information given most strongly supports which of the following general claims about the country described?

A) If the percentage prescribed by law for insurance companies is decreased, private patients without insurance coverage will pay more for healthcare services.
Correct.
B) The dollar amount paid by insurance companies to healthcare providers will not change unless the legally specified percentage is changed. Not necessarily. healthcare providers will adjust their fees so that the insurance companies pay the same dollar amount that they would have paid before the change. but there could be other reason too.
C) If the number of patients without insurance coverage grows beyond the number of patients covered by insurance, healthcare providers will adjust their billing practices according to the needs of those patients.

D) If an economic recession causes the healthcare industry to suffer, the legally prescribed percentage paid by insurance companies will be increased. not necessarily. Healthcare industry change their % according to insurance, vice versa may not be true.
E) Acquiring insurance coverage, if possible, would be a sound economic decision for any patient:- if the percentage paid by insurance very less and premium comparatively high doesnt make sense.

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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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New post 04 Nov 2016, 05:07
This is a "Must be True"/"Inference" question. Correct answer choice will not bring in any outside information (i.e. only refers to information provided in the stimuli).

$ fees x % covered by insurance = $ paid by insurance
It is given that the "$ paid by insurance" is maintained constant even after the changes in "% covered by insurance". So, we can infer that there is a inverse relationship between the "$ fees billed by healthcare providers" and "% covered by insurance companies"

A) If the percentage prescribed by law for insurance companies is decreased, private patients without insurance coverage will pay more for healthcare services.
Inline with our inference. If percentage decreases, fees will increase. Since private patients have no coverage, they end up paying more.
B) The dollar amount paid by insurance companies to healthcare providers will not change unless the legally specified percentage is changed.
This is a little tricky one. This choice says that the "dollar amount paid" is constant unless the "percentage changes".
For example, there are 10 bills each 100$ with a insurance cover of 10%, amount paid by insurance companies = 10x100x0.1 = 100$
If there are 20 bills each 100$ with a insurance cover of 10%, amount paid by insurance companies = 20x100x0.1 = 200$
As we can see even though the percentage did not change, the dollar amount paid by the insurance companies changed. So this choice is incorrect

C) If the number of patients without insurance coverage grows beyond the number of patients covered by insurance, healthcare providers will adjust their billing practices according to the needs of those patients.
Number of patients is not discussed in the stimuli. Out of scope information
D) If an economic recession causes the healthcare industry to suffer, the legally prescribed percentage paid by insurance companies will be increased.
Economic recession is not discussed in the stimuli. Out of scope information
E) Acquiring insurance coverage, if possible, would be a sound economic decision for any patient.
Whether having a insurance cover is a good decision or not is not discussed in the stimuli. Out of scope information

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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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In a certain country, insurance companies pay only a fixed percentage – set by law and uniform across all insurance companies – of the fees actually billed by healthcare providers. Patients without insurance coverage, however, are legally responsible for the full amount of those fees. If the fixed percentage set for insurance companies is changed, healthcare providers will adjust their fees so that the insurance companies pay the same dollar amount that they would have paid before the change.

The information given most strongly supports which of the following general claims about the country described?

A) If the percentage prescribed by law for insurance companies is decreased, private patients without insurance coverage will pay more for healthcare services.
If the percentage of the amount paid by insurance companies is decreased he hospitals would raise their prices so that the amount pid by insurance companies remain the same.In that case the price paid by patients without insurance will be increased because the patients without the cover have to pay the full bill of the hospital.

B) The dollar amount paid by insurance companies to healthcare providers will not change unless the legally specified percentage is changed.

No such point is discussed in the argument.

C) If the number of patients without insurance coverage grows beyond the number of patients covered by insurance, healthcare providers will adjust their billing practices according to the needs of those patients.
No such theory is suggested in the argument.

D) If an economic recession causes the healthcare industry to suffer, the legally prescribed percentage paid by insurance companies will be increased.
Recession is out of scope.

E) Acquiring insurance coverage, if possible, would be a sound economic decision for any patient.
out of scope.

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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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New post 21 Mar 2017, 20:44
Merging topics . Please, search questions before posting.

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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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New post 09 Jul 2017, 05:37
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(1) Identify the Question Type
At first this may seem to be a Strengthen question, because of the phrase “most strongly supports.” However, we are asked which answer choice is supported by the information in the passage, so this is an Inference question.

(2) Deconstruct the Argument
Under the law, insurance companies only have to pay a fixed percentage of healthcare bills, but private patients must pay the full amount. In addition, if the percentage is changed, healthcare providers will adjust the amount of the bill, so that the dollar amount does not change. If the legal percentage is decreased, healthcare providers must increase the billing level in order to offset the change. Alternatively, if the legal percentage is increased, healthcare providers would have to decrease the billing level in order to offset the change.

(3) State the Goal
On inference questions, we’re looking for the answer that must be true according to the information given in the passage. The most tempting wrong answers are often items that might be true but don’t have to be true.

(4) Work from Wrong to Right

(A) CORRECT. The passage states that, if the percentage is changed, healthcare providers will adjust the amount of the bill so that the dollar amount does not change. In particular, if the legal percentage is decreased, healthcare providers must bill increased amounts to accomplish this objective. Since private patients are responsible for the full amount billed, they will be responsible for the new, higher amount.

(B) There is nothing in the passage to suggest that the amount paid by insurance companies could not change for reasons unrelated to the law. For example, nothing in the passage prevents the healthcare providers from changing their prices, and a change in prices without a change in the percentage paid would result in a change in the dollar amount paid by the insurance companies.

(C) This statement might be true, but there is nothing in the passage to indicate that it must be true. The passage describes what healthcare providers will do only in the event of a change in the law; it does not describe what they will do in other situations, such as the one described in this answer choice.

(D) The passage provides no information about what determines the legally set percentage.

(E) This statement may be true for some patients but does not have to be true for all, e.g., for those who use healthcare services very infrequently. For such patients – even if they pay greater bills when they do use healthcare services – the difference may not make up for the cost of insurance premiums, especially if those premiums are high.

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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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New post 22 Jul 2017, 08:47
Hi GMAT clubbers

Help! I don't understand why the answer choice is A.

A) If the percentage prescribed by law for insurance companies is decreased, private patients without insurance coverage will pay more for healthcare services.

In the answer, it is explained that: "The passage states that, if the percentage is changed, healthcare providers will adjust the amount of the bill so that the dollar amount does not change. In particular, if the legal percentage is decreased, healthcare providers must bill increased amounts to accomplish this objective. Since private patients are responsible for the full amount billed, they will be responsible for the new, higher amount."

Confusion, pls help.
I thought that only patients who have insurance coverage would be bound by the law for insurance companies.
Without insurance, they are bound to pay the full amount anyway.

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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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New post 23 Jul 2017, 12:32
roastedchips wrote:
Hi GMAT clubbers

Help! I don't understand why the answer choice is A.

A) If the percentage prescribed by law for insurance companies is decreased, private patients without insurance coverage will pay more for healthcare services.

In the answer, it is explained that: "The passage states that, if the percentage is changed, healthcare providers will adjust the amount of the bill so that the dollar amount does not change. In particular, if the legal percentage is decreased, healthcare providers must bill increased amounts to accomplish this objective. Since private patients are responsible for the full amount billed, they will be responsible for the new, higher amount."

Confusion, pls help.
I thought that only patients who have insurance coverage would be bound by the law for insurance companies.
Without insurance, they are bound to pay the full amount anyway.


Hi roastedchips

Analyse option A mathematically -
Let the total medical bill be 100 and let insurance reimbursement be 90%.
So the dollar amount paid by insurance company is 90 and those who don't have insurance pay 100
No as per Option A Reimbursement % is decreased. lets say it is now 80% but the hospitals want the same dollar amount i.e 90 so they will increase their bill to 80%*A = 90 or A (bill amount) = 112.5. So those who don't have insurance will now have to pay an increased amount of Rs 112.5

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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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New post 20 Oct 2017, 22:57
maggie27 wrote:
In a certain country, insurance companies pay only a fixed percentage – set by law and uniform across all insurance companies – of the fees actually billed by healthcare providers. Patients without insurance coverage, however, are legally responsible for the full amount of those fees. If the fixed percentage set for insurance companies is changed, healthcare providers will adjust their fees so that the insurance companies pay the same dollar amount that they would have paid before the change.

The information given most strongly supports which of the following general claims about the country described?

(A) If the percentage prescribed by law for insurance companies is decreased, private patients without insurance coverage will pay more for healthcare services.

(B) The dollar amount paid by insurance companies to healthcare providers will not change unless the legally specified percentage is changed.

(C) If the number of patients without insurance coverage grows beyond the number of patients covered by insurance, healthcare providers will adjust their billing practices according to the needs of those patients.

(D) If an economic recession causes the healthcare industry to suffer, the legally prescribed percentage paid by insurance companies will be increased.

(E) Acquiring insurance coverage, if possible, would be a sound economic decision for any patient.



This is an inference question though "most strongly supports" makes us decipher to categorize this question type under "strengthen" category.

Lets look at the options:

1. For a bill of USD 100, Insurance companies pay 80% of is. Now, govt has asked them to pay 50% of the same. The bill will hence be now USD 160 instead of 100. So, guys without insurance, you're screwed! Bam!

2. Nothing in the passage suggests that amount paid by insurance companies could not change for reasons unrelated to the law

3.Practically, true! But, nothing in the passage proves it. Remember, this is an inference question.

4. Nothing mentioned

5.Very good. But who is talking about it here?

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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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New post 26 Oct 2017, 12:47
In a certain country, insurance companies pay only a fixed percentage – set by law and uniform across all insurance companies – of the fees actually billed by healthcare providers. Patients without insurance coverage, however, are legally responsible for the full amount of those fees. If the fixed percentage set for insurance companies is changed, healthcare providers will adjust their fees so that the insurance companies pay the same dollar amount that they would have paid before the change.

The information given most strongly supports which of the following general claims about the country described?

(A) If the percentage prescribed by law for insurance companies is decreased, private patients without insurance coverage will pay more for healthcare services. -Since the money paid by the insurance companies will remain same, hence we can say that if the percentage of payment made by the insurance company is reduced then the total bill generated by the hospital is higher than the bill generated before. Thus, a non-insured will end up paying higher amount than he/she did before.

(B) The dollar amount paid by insurance companies to healthcare providers will not change unless the legally specified percentage is changed. -Any change in the percentage will not counter the amount paid by the insurance company. This option tries to refute the premise, a scenario that can never happen in GMAT.

(C) If the number of patients without insurance coverage grows beyond the number of patients covered by insurance, healthcare providers will adjust their billing practices according to the needs of those patients. -Not given in the passage

(D) If an economic recession causes the healthcare industry to suffer, the legally prescribed percentage paid by insurance companies will be increased. -Not stated in the passage

(E) Acquiring insurance coverage, if possible, would be a sound economic decision for any patient. -Out of scope
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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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Re: In a certain country, insurance companies pay only a fixed percentage [#permalink]

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New post 20 Nov 2017, 02:47
maggie27 wrote:
In a certain country, insurance companies pay only a fixed percentage – set by law and uniform across all insurance companies – of the fees actually billed by healthcare providers. Patients without insurance coverage, however, are legally responsible for the full amount of those fees. If the fixed percentage set for insurance companies is changed, healthcare providers will adjust their fees so that the insurance companies pay the same dollar amount that they would have paid before the change.

The information given most strongly supports which of the following general claims about the country described?

(A) If the percentage prescribed by law for insurance companies is decreased, private patients without insurance coverage will pay more for healthcare services.

(B) The dollar amount paid by insurance companies to healthcare providers will not change unless the legally specified percentage is changed.

(C) If the number of patients without insurance coverage grows beyond the number of patients covered by insurance, healthcare providers will adjust their billing practices according to the needs of those patients.

(D) If an economic recession causes the healthcare industry to suffer, the legally prescribed percentage paid by insurance companies will be increased.

(E) Acquiring insurance coverage, if possible, would be a sound economic decision for any patient.


[color=#ec008c]The answer is clear A . other contenders are option b and option d
[/color]
as for option c and option e are concerned they are New information answers and can be clearly neglected
Lets come to the argument the last line saysIf the fixed percentage set for insurance companies is changed, healthcare providers will adjust their fees so that the insurance companies pay the same dollar amount that they would have paid before the change.
the if part introduces a sufficient condition and the then part (( after comma )) introduces necessary condition
NOW IF ""If the fixed percentage set for insurance companies is changed"" = FPC---SUFFICIENT CONDITION
AND "healthcare providers will adjust their fees so that the insurance companies pay the same dollar amount that they would have paid before the change = HPA ((( NECESSARY CONDITION
THEN BY CONDITIONAL REASONING FPC---------HPA or FPC leads to HPC ((1)). Let's keep a note of this
coming to options
option B says thatThe dollar amount paid by insurance companies to healthcare providers will not change unless the legally specified percentage is changed
if this is written in conditional reasoning form , unless introduces a necessary condition and everything before it is sufficient condition so if i write this statement in if ..then form it says that
IF THE DOLLAR AMOUNT PAID BY INSURANCE COMPANIES IS CHANGED , THEN THE LEGALLY SPECIED PERCENTAGE WILL CHANGE
this is clearly a mistaken reversal of 1 (( check it ))

option d says that If an economic recession causes the healthcare industry to suffer, the legally prescribed percentage paid by insurance companies will be increased
again here we have the sufficient condition mentioned in 1 as necessary condition in this option

ALSO D dosen't pass the fact test and brings in new information
now coming to option A
[/b]If the percentage prescribed by law for insurance companies is decreased, private patients without insurance coverage will pay more for healthcare services[/b]
We are also given Patients without insurance coverage, however, are legally responsible for the full amount of those fees
without introduces an necessary condition . Therefore if i write it doen in if then form
IF PATIENTS ARE LEGALLY RESPONSIBLE FOR THE FULL AMOUNT OF FEES , THEN THEY ARE WITHOUT INSURANCE COVERAGE-----((2))
COMBINING 2 AND 1
If the fixed percentage set for insurance companies is changed, healthcare providers will adjust their fees so that the insurance companies pay the same dollar amount that they would have paid before the change.
WE CAN CLEARLY SEE THAT OPTION A IS THE SUMMATION OF 1 AND 2
THE IF PART FROM 1 AND THE THEN PART FROM 2
OPTION A000 If the percentage prescribed by law for insurance companies is decreased, private patients without insurance coverage will pay more for healthcare services
HERE CHANGED IS DECREASED AND IF THE PATIENTS WITHOUT INSURANCE COVER ARE FULLY RESPONSIBLE FOR ALL COSTS THEN OFCOURSE THEIR COSTS WILL INCREASE

HOPE IT HELPS :)

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Re: In a certain country, insurance companies pay only a fixed percentage   [#permalink] 20 Nov 2017, 02:47
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