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

Question

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.

(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.

aditya8062 · Accepted Answer

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 !!

geno5 · Answer

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.

Nevernevergiveup · Answer

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.

samusa · Answer

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!!

rockstar23 · Answer

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.

alwaysnewbie · Answer

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

abhishekdadarwal2009 · Answer

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.

Lucy Phuong · Answer

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.

egmat · Answer

- Insurance companies pay  X%  of billed fees (fixed by law)
- Uninsured patients pay  100%  of billed fees
-  Rule:  If  X%  changes, providers adjust fees to keep insurance payments constant in  dollar terms

The Mechanism: 
When insurance  %  goes  DOWN , providers must  RAISE  their fees to collect the same dollar amount from insurers.

Let's test with numbers: 
 Before:  Fee =  $100 , Insurance rate =  80% 
- Insurer pays:  $100  ×  80%  =  $80 
- Uninsured pays:  $100

After (rate drops to 40%):  Provider raises fee to  $200 
- Insurer pays:  $200  ×  40%  =  $80  (same as before!)
- Uninsured pays:  $200  ( doubled! )

The Differential Impact: 
- Insurance companies: Protected - pay same dollar amount
- Uninsured patients:  Exposed  - pay full amount of higher fees

Why (A) is correct: 
It directly captures this mechanism - when insurance % decreases, fees rise, and uninsured patients bear the full burden.

Why others fail: 
-  (B)  Too absolute - ignores other factors that could change payments
-  (C)  Introduces patient mix changes not discussed in stimulus
-  (D)  Introduces recession scenario not supported by stimulus
-  (E)  Too broad - cannot conclude insurance is sound for  any  patient

Answer: A

AlfonsoT19 · Answer

I differ in your opinion for rejecting option (B). Per the passage, the dollar amount  will not change   even if  the legally specified percentage is changed. So, as discussed below, is wrong because is opposite, not restrictive.

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

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