Let's first identify the paradox. It was thought that private insurance costs would decrease because the introduction of the National Health scheme meant that insurers would no longer be paying for the bulk of health care costs. However, the cost of private health care has actually dramatically increased. We need to find an answer choice that works as a possible explanation for this discrepancy.
Answer choice (D) does just that. If the only time Impanians are now buying private medical insurance is when they expect that they will need care of kinds not available in the National Health scheme (i.e. those that are more unusual and sophisticated), then this means that people buying private medical health insurance will be using it, as opposed to before when people would buy private medical insurance to be insured at all times and may not have necessarily needed or used it for unusual and sophisticated procedures. If those who buy private health insurance are now all using it, the cost of private health insurance might go up since it won't be offset by those who merely bought private health insurance to be covered at all times.
Hope that was helpful! Please let us know if you have any other questions.
Julie-VAugust 12, 2019
Thank you for explaining (D) so well!
Would (C) be incorrect because it doesn't resolve the paradox by stating that those with private insurance has not increased?
I appreciate all the help!
RaviAugust 12, 2019
@Julie-V,
That's correct. Having no increase in the number of individuals with health insurance doesn't do anything to help explain the large increase in insurance rates, so we can get rid of (C).
jcefalu88@gmail.comSeptember 11, 2020
I understand how this can help resolve the paradox but isn't answer choice D stated in the set of facts? I ruled this answer choice out because it seemed to simply restate that which was already mentioned "Impanians (or their private insurance companies) have had to pay only for the more unusual and sophisticated medical procedures," then further elaborated on "it was hoped that private insurance to pay for these procedures would be available at modest cost, since the insurers would no longer be paying for the bulk of health care costs, as they had done previously." Isn't that exactly what this answer choice states? Seems to be a poorly crafted question.
