Joseph: Health insurance premiums are growing at an alarming

Question

Joseph: Health insurance premiums are growing at an alarming rate. This is, in part, because many hospitals bill for unnecessary diagnostics and tests that inflate the subsequent amount that insurers pay out to them. These expenses are then passed on to consumers in the form of increased insurance premiums. Therefore, reducing the number of unnecessary tests performed by health care providers will be effective in controlling growing health insurance premiums.

Which of the following is an assumption required by the argument?

A. Doctors are generally able to determine, with great reliability, which diagnostic procedures and tests would yield the most effective results
B. Tests and diagnostic procedures do not make up an insignificant portion of the bills that are sent to insurers
C. Insurance companies in other industries, such as auto and home, have been able to reduce costs by reducing the number of unnecessary repairs and replacements on claims for automobiles and homes
D. Patients are not just as likely as doctors to choose the most expensive diagnostics and tests.
E. Health insurance premiums have increased twice as fast in the past five years than they have over an average of the past 25 years.

KarishmaB · Accepted Answer

Let me point out one thing here - the conclusion is:

Reducing unnecessary tests will control growing costs i.e. the costs will not grow so much. The conclusion is not that the costs will go down.
The assumption certainly is that the cost of unnecessary tests have an impact on the cost of insurance premiums i.e. the cost of unnecessary tests is significant. So you are right there.

The only other option where there could be a confusion is "A. Doctors are generally able to determine, with great reliability, which diagnostic procedures and tests would yield the most effective results"
i.e. the doctors can figure out which tests are 'worth it' and which are not.
It certainly seems like an assumption - if someone tells us that the insurance costs are shooting up so reduce unnecessary tests to reduce the growing costs, we might be tempted to say, 'But you are assuming that it is possible to say which tests are necessary and which are not.' but in CR, it is not a valid assumption.

If our conclusion is of the form: 'A will lead to B', we need to analyze only whether A will lead to B. Whether A is possible or not is out of our scope. The point is 'if A DOES happen, can B happen?'

aditya111 · Answer

Ans is B in my opinion

Let's analyze:
Option a is out of scope.

Option b- if we read line 2 carefully we csn find the wording 'in part'. So, by this, there are other causes for the premium to increase. And option b resolves this issue by stating that the diagnostic tests are NOT INSIGNIFICANT in other words IS SIGNIFICANT.

Posted from my mobile device

jgomey · Answer

Premise 1-Providers are billing insurers for unnecessary tests.

Premise 2-Insurers are passing on these costs to policyholders.

Conclusion-Stop paying for these tests >>> healthcare costs go down

Assumption>>>These have a impact on the cost of healthcare.

Choice "A": the cost of those tests is significant.

Seems to fit my reasoning. Any thoughts?

ashwini86 · Answer

This question appeared on the IR study section , but i am not completely convinced with their answer

Joseph : Health insurance premiums are growing at an alarming rate. This is, in part, because many hospitals and
clinics bill for unnecessary diagnostics and tests that inflate the subsequent amount that insurers pay out to them.
These expenses are then passed on to consumers in the form of increased insurance premiums. Therefore,
reducing the number of unnecessary tests performed by health care providers will be effective in controlling
growing health insurance premiums.

identify the assumptions upon which argument depends
A. Doctors are generally able to determine, with great reliability, which
diagnostic procedures and tests would yield the most effective
results.

B Tests and diagnostic procedures do not make up an insignificant
portion of the bills that are sent to insurers.
C Insurance companies in other industries, such as auto and home,
have been able to reduce costs by reducing the number of unnecessary
repairs and replacements on claims for automobiles and homes.
D Patients are not just as likely as doctors to choose the most expensive
diagnostics and tests.
E Health insurance premiums have increased twice as fast in the past
five years than they have over an average of the past 25 years.

Answer : B .... Joseph argues that growing health insurance premiums can be controlled by reducing
the number of unnecessary tests performed by doctors. He says this because many
tests that are performed, and then billed to insurance providers, are unnecessary. But
note the assumption: While this practice may relate to some excess expenditure, the
argument assumes that it’s enough excess spending that, if it were cut, could save the
healthcare industry quite a bit. Accordingly, the second assumption, that “tests and
diagnostic procedures DO NOT make up an insignificant portion of the bills to insurers,”
is required. Without it—if we could then say (via the Assumption Negation Technique)
that these tests do represent an insignificant portion of the bill—their presence or
absence does not matter. Accordingly, Joseph’s argument requires that fact.

msk0657 · Answer

This question appeared on the IR study section , but i am not completely convinced with their answer

Joseph : Health insurance premiums are growing at an alarming rate. This is, in part, because many hospitals and
clinics bill for unnecessary diagnostics and tests that inflate the subsequent amount that insurers pay out to them.
These expenses are then passed on to consumers in the form of increased insurance premiums. Therefore,
reducing the number of unnecessary tests performed by health care providers will be effective in controlling
growing health insurance premiums.

identify the assumptions upon which argument depends
A. Doctors are generally able to determine, with great reliability, which
diagnostic procedures and tests would yield the most effective
results.

B Tests and diagnostic procedures do not make up an insignificant
portion of the bills that are sent to insurers.
C Insurance companies in other industries, such as auto and home,
have been able to reduce costs by reducing the number of unnecessary
repairs and replacements on claims for automobiles and homes.
D Patients are not just as likely as doctors to choose the most expensive
diagnostics and tests.
E Health insurance premiums have increased twice as fast in the past
five years than they have over an average of the past 25 years.

Every assumption question will definitely have a conclusion and without that there won't be any argument.

Here the conclusion is that Therefore,reducing the number of unnecessary tests performed by health care providers will be effective in controlling growing health insurance premiums.
( We have a conclusion indicator).

Reducing the tests will control the premium amount.  - simple understanding of the conclusion.

We have negation technique which can help us to find out the answer for the assumption based question.

A. Negate this... then we get Doctors are  NOT  able to determine... blah blah........insurers ( negate the main verb always in the sentence). This is not weakening the conclusion in fact strengthening.

B. Negate this... then we get Tests and diagnostic procedures  DO  make up...blah blah....insurers. Here both tests and diagnostic procedure do make up the bills go high. Even when they cut unnecessary tests but necessary tests and diagnostic procedures which are mandatory could be very costly and then they put these costs in the bills .Thus ,insurers will get burden.
 Thus it weakens the conclusion.  and the correct option.

C. Out of scope
D. Unnecessary.
E. Irrelevant.

goforgmat · Answer

after first round of elimination only A and B remain,
If u negate A,it doesn't shatter the conclusion. 
If Doctors are able to determine which tests yield effective results how does that affect the number of the tests?does it reduce the tests?its not clear from the statement.Hence this is not our assumption.
Negate B it totally does. 
If tests and diagnostic procedures add an insignificant sum ,reducing them wont reduce the bill amount sent to insurers.

sairam595 · Answer

Can someone explain why option 'D' is incorrect.

if we negate option D - Patients are just as likely as doctors to choose the most expensive diagnostics and tests.- doesn't it weaken the conclusion

KarishmaB · Answer

The conclusion talks about “unnecessary tests”.
Option (D) talks about “expensive tests”. 
The two are not related. Unnecessary tests could be cheap or expensive - either way, cutting them off would save cost.

abrakadabra21 · Answer

Unnecessatry test => increased premium
assumption that attacks that -> reducing the number of unnecessary tests performed by health care providers will not be effective in controlling growing health insurance premiums.

Which of the following is an assumption required by the argument?

A. Doctors are generally able to determine, with great reliability, which diagnostic procedures and tests would yield the most effective results

Negate 
Doctors are not generally able to determine, with great reliability, which diagnostic procedures and tests would yield the most effective results. key is "most effective result" the argument is about necessary or unnecessary and not about "most" or "worst"

B. Tests and diagnostic procedures do not make up an insignificant portion of the bills that are sent to insurers

Tests and diagnostic procedures do make up an insignificant portion of the bills that are sent to insurers => that means reducing the number of unnecessary tests performed by health care providers will not be effective in controlling growing health insurance premiums. As test and DP are just insignificant portion.

C. Insurance companies in other industries, such as auto and home, have been able to reduce costs by reducing the number of unnecessary repairs and replacements on claims for automobiles and homes

Out of scope.

D. Patients are not just as likely as doctors to choose the most expensive diagnostics and tests.

E. Health insurance premiums have increased twice as fast in the past five years than they have over an average of the past 25 years.

Irrelevant

mbaprep2016 · Answer

fact 1:- premiums are high
fact 2 :- unnecessary test adds up significantly

conclusion :- if the number of unnecessary tests reduces it will effect the cost of the health insurance premiums
assumption 1 :- No other cost get any effect of this decrease
assumption 2 :- percentage cost for tests is such high that it affects the cost.
With this understanding lets see answer choices
B gives the right answer.

law258 · Answer

A. Doctors are generally able to determine, with great reliability, which diagnostic procedures and tests would yield the most effective results

this does not relate to the price of insurance

IMO:B

B. Tests and diagnostic procedures do not make up an insignificant portion of the bills that are sent to insurers --> Correct! If these tests make up an insignificant portion of the bills, the argument will collapse.

C. Insurance companies in other industries, such as auto and home, have been able to reduce costs by reducing the number of unnecessary repairs and replacements on claims for automobiles and homes --> irrelevant; we don't care about the auto industry. Each industry is completely different.

D. Patients are not just as likely as doctors to choose the most expensive diagnostics and tests. --> the prompt didn't discuss the nature of the diagnostics/tests - we know there are such things, but this is adding additional information about them (i.e. the degree of expense associated with them). Therefore, we can eliminate.

E. Health insurance premiums have increased twice as fast in the past five years than they have over an average of the past 25 years. --> irrelevant; this is background info - this doesn't provide us with a case to challenge the argument.

pattamop · Answer

A. Doctors are generally able to determine, with great reliability, which diagnostic procedures and tests would yield the most effective results

this does not relate to the price of insurance

IMO:B

pattamop · Answer

A. Doctors are generally able to determine, with great reliability, which diagnostic procedures and tests would yield the most effective results

this does not relate to the price of insurance

IMO:B

Shiv2016 · Answer

Premise: Health insurance premiums are growing at an alarming rate. 
Premise: This is, in part, because many hospitals bill for unnecessary diagnostics and tests that inflate the subsequent amount that insurers pay out to them.
Premise: These expenses are then passed on to consumers in the form of increased insurance premiums. 
Conclusion: Therefore, reducing the number of unnecessary tests performed by health care providers will be effective in controlling growing health insurance premiums.

Health Insurance premiums are increasing………………….unnecessary diagnostics and tests…………..
Reduce NUMBER of unnecessary tests…………..to control premiums
1) Customers do not want these tests and are aware of this fact (costs). Therefore, would not want the unwanted tests
2) Customers preference for the tests and if they would want to continue using these tests in the future as well
Let’s look at the choices:
A. Doctors are generally able to determine, with great reliability, which diagnostic procedures and tests would yield the most effective results
Doctors are able to determine, therefore using these tests. Irrelevant
B. Tests and diagnostic procedures do not make up an insignificant portion of the bills that are sent to insurers
Negated statement: Tests and diagnostic procedures DO MAKE UP AN insignificant portion of the bills that are sent to insurers.
If that is so then why to worry about these costs ? 
Correct

C. Insurance companies in other industries, such as auto and home, have been able to reduce costs by reducing the number of unnecessary repairs and replacements on claims for automobiles and homes
Other industries…..OUT OF SCOPE

D. Patients are not just as likely as doctors to choose the most expensive diagnostics and tests.
EXPENSIVE TESTS AND UNNECESSARY TESTS CAN BE DIFFERENT. INCORRECT.

E. Health insurance premiums have increased twice as fast in the past five years than they have over an average of the past 25 years.
Data does not do much to support the conclusion. It just re-states the point from the premise. INCORRECT.

abhishekmayank · Answer

Not agree completely with the reasoning of the selection of option B.

We have the premise from the question stem :

This is, in part, because many hospitals bill for unnecessary diagnostics and tests that inflate the subsequent amount

This premise can't become assumption as the option B is trying to covey. The cost of diagnostic tests can't be assumed insignificant, when the given premise in the question already asserts that such costs inflate the bill amount.

VerbalBot · Answer

Automated notice from GMAT Club VerbalBot: 

A member just gave Kudos to this thread, showing it’s still useful. I’ve bumped it to the top so more people can benefit. Feel free to add your own questions or solutions.

 This post was generated automatically.

Joseph: Health insurance premiums are growing at an alarming

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

GMAT Critical Reasoning (CR) Questions

Joseph: Health insurance premiums are growing at an alarming

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards