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

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="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.

Hope the above helps!!

I DONOT MIND KUDOS

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.

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.

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.

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

Thanks

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.

Merging topics . Please, search questions before posting.

OE for those who need it

(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.

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

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?

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

nice question...seems 700+ one...kudos

[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

Hi daagh Sir, mikemcgarry ,

I understand that this is an inference question.
However, A requires an assumption that, The Health care won't increase the FEES amount ONLY for Insurance companies. Thereby, The increase on fees is affected even on the private patients. that is on the retail cost of provided services.
Furthermore, I would agree with A if the stimulus says that they will increase the service charges on all the resources. OR the tariffs on the services will be increased.
Just as the cost of goods in an Retail outlet.

Can you please tell me where am i going wrong. Or Am i Interpreting something wrong here ?

Sorry to say, but the argument given for correct option A is faulty. The fees for the patient without insurance coverage will not be affected in which ways. Only the fee to be paid (non-reimbursable) by the people having insurance coverage will increase. Hospitals adjusting the bill to match the dollar amount is applicable only for the people who have the insurance coverage, it doesn't affect the people who don't have insurance coverage. Why then are we assuming that fees of people without insurance coverage will increase.