Healthcare expenses of its employees have been weighing down

Question

Healthcare expenses of its employees have been weighing down on the profits of Honeywell Inc. Analyzing the expenses, Honeywell Inc discovered that while there was no significant difference in the expenses per capita based on the age of the employee, most expenses were for the operating procedures that required hospitalization. However, far fewer than half of all Honeywell employees reported being hospitalized.

Based on the veracity of the facts stated above, which of the following can be correctly inferred ?

a. Most Honeywell employees who underwent procedure paid little or nothing out of pocket to cover the cost of procedures.

b. Those who underwent procedures did not have a choice to avoid hospitalization.

c. Procedures that required hospitalization had higher per capita expenses than procedure that did not.

d. The average expense per employee was lower for employees who did not undergo operation procedures that required hospitalization.

e. Honeywell covered a higher proportion of healthcare expenses for employees who underwent operation procedures that required hospitalization than those who did not.

sahuayush · Answer

chetan2u   VeritasKarishma   GMATNinja

Can you help with this question?

sahuayush · Answer

Sajjad1994

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Krish728 · Answer

The argument talks about HealthCare expenses provided by the company are reducing the profits of the the company. The expenses per person based on the age are almost same but most of the expenses are the ones which required hospitalization. Then the argument says less than 50% of the company employees are being hospitalized.

Some people can get confused between C and D.

Option C, talks about the procedures that required hospitalization had higher per capita expenses than procedure that did not, in general or in a broader sense and we don't know that.

If the option C had said that procedures that required hospitalization had higher per capita expenses than procedure that did not  for Honeywell Inc , then it would have been correct.

sahuayush · Answer

But how did you figure out that option C was written in a generic sense? Are there any other solid grounds on which Option C can be rejected? Also what about Option E?

Krish728

chetan2u · Answer

So we can rephrase the important part in simpler terms as...
Age of the employee did not affect expenses per capita. Most expenses were on OP that required hospitalization. However, far fewer than half of all Honeywell employees reported being hospitalized.

Let us create some data...

The total expense = T = $1000
  OP_h = expenses for the operating procedures that required hospitalization = >500, say $600
 OP_{nh} =expenses for the operating procedures that did not require hospitalization
 H_{nOP} =expenses for the hospitalization that did not require operating procedures

Total men = Tm=100 
 T_h = number that required hospitalization and procedures = <50, say 40
 T(OP)_{nh} =number that required the operating procedures but not require hospitalization

a. Most Honeywell employees who underwent procedure paid little or nothing out of pocket to cover the cost of procedures.
Nothing is talked about payments by employees

b. Those who underwent procedures did not have a choice to avoid hospitalization.
Again out of context

c. Procedures that required hospitalization had higher per capita expenses than the procedure that did not.
There are many unknowns, so we can say anything for definite on this.
For example
Now we know that  T_h =40 and expenses  OP_h  =600.  So per capita can be  600/40=$15
But we do not know anything else. Say  T(OP)_{nh} =10 and expenses OP_{nh}=200.  So per capita can be  200/10=$20

d. The average expense per employee was lower for employees who did not undergo operation procedures that required hospitalization.
Avg expense for employees who did not undergo operation procedures that required hospitalization =  \frac{(Tm-T_h)}{T-OP_h}=\frac{400}{60}=6.88 
Avg expense for employees who had to undergo operation procedures and also required hospitalization =  \frac{(T_h)}{OP_h}=\frac{600}{40}=15 
 Yes always, because a higher expense by a smaller number of people will always give a higher average expense.

D

gvij2017 · Answer

I was confused between D and E.

D uses term "The average expense per employee" and E uses "a higher proportion of healthcare expenses for employees"

Now reading the argument- Average expanse of HC is same for all.

Honeywell covers most expanses for operating procedures which require hospitalization. But employees requiring hospitalization are very few. 
Here one thing can be deducted that very few ppl who underwent hospitalization consume most of the total health expanses but very large group of employee consume less HC expanses.

So in terms of average, D is correct statement.

But here it would not be correct to say proportion of HC expanses. 
HC expanses_1 = number of employees who underwent hospitalization*Average HC expanses per employee who underwent hospitalization.
HC expanses_2 = number of employees who don't underwent hospitalization*Average HC expanses per employee who don't underwent hospitalization.

Therefore, E is not helping to address questions stem.

D is correct.

VerbalBot · Answer

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Healthcare expenses of its employees have been weighing down

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