health insurance companies must charge higher rates - RC

[KK]

Hello I am really confused about the following paragraph from CAT Test

To remain financially sound, health insurance companies must charge higher rates to insure people considered a higher risk. Lacking complete information about individuals, insurers are forced to set a standard rate, based on the average risk of the group, for a particular segment of the population. Consumers in poor health are willing to pay for the insurance, knowing that it will cover their higher-than-average health-care costs. In contrast, healthy consumers often decide to forgo the insurance, reasoning that it is less expensive to pay out-of-pocket for their lower-than-average health-care costs. The result, called "adverse selection," is that the riskier members of a group will comprise the group of insurance applicants, potentially leading to a market failure in which insurance companies cannot afford to offer insurance at any price.
Among people over age sixty-five, even the wealthy can have difficulty obtaining fairly priced medical insurance, simply because of their age. However, those who blame so-called insurance company greed and discrimination against the elderly are ignoring the reality of adverse selection. Younger people generally obtain health insurance through their employers' group insurance plan. Employer’s plans obligate all employees to enroll in the plan and effectively pre-screen for general health, as a minimum health level is required to hold a job. Insurance companies can therefore charge a lower premium, based on the lower average risk of the employee pool, without worrying that healthy employees will opt out of the plan. Consumers over sixty-five, typically not employed and thus seeking insurance individually, are necessarily more vulnerable to market failure stemming from adverse selection.

Question
Which of the following best describes the function of the first paragraph within the passage as a whole?
It states an opinion that is supported elsewhere in the passage.
It outlines a process that is critiqued elsewhere in the passage.
It advances an argument that is disputed elsewhere in the passage.
It introduces conflicting arguments that are reconciled elsewhere in the passage.
It defines a problem that is cited elsewhere in the passage.

I thing the correct answer is A, as the first sentence of the first paragraph does offer an opinion and which is supported in the second paragarph. But the correct answer is E.

Kindly help!

[MAST]

Hi,

The first para gives the background infor about problem of adverse selection - why it originates and states that it leads the market to crisis.

Second para simply gives a specific impact of adverse selection or in other word cites a particular case of the problem

Hope it helps

[KK]

Thanks MAST, sure understand that now

[JonathanSchneider]

Good explanation, MAST.
KK, you may want to re-diagram this RC passage to practice focusing on the essential structure of each paragraph. These strucutre questions hinge on our ability to compare one paragraph's purpose with the overall trajectory of the argument. In a way, this is like finding the purpose of one line of a CR argument within the argument as a whole.

[chitrangada.maitra]

Doesn't the first sentence of the first paragraph encapsulate the essence of the passage?

"To remain financially sound, health insurance companies must charge higher rates to insure people considered a higher risk."

It seems to me that the author is reinforcing this point all the way! - option A

[tim]

That doesn't necessarily make the answer A. Both A and E look like the first sentence is reinforced elsewhere. The problem with A is that it claims the first sentence is an opinion, and E is furthermore a better choice because the second paragraph gives an example of the first sentence rather than providing evidence for it..

Also, when copying a RC passage, please make it clear where the paragraph breaks are.. :)

[pratapravi.singh19]

Doesn't the first sentence indicate author's opinion:
To remain financially sound, health insurance companies must charge higher rates to insure people considered a higher risk.

Also, the keyword : In contrast is used?

How to tell that it's an opinion and not an opinion?

Thanks!

[jnelson0612]

Doesn't the first sentence indicate author's opinion:
To remain financially sound, health insurance companies must charge higher rates to insure people considered a higher risk.

Also, the keyword : In contrast is used?

How to tell that it's an opinion and not an opinion?

Thanks!

Hmm. An opinion is usually more obviously biased in one way or another. Examples are:
"Thus, the mayor's plan is clearly flawed".
"Clearly, the plan is the best way to save money".

It logically follows that to make money health insurance companies must charge higher risk people more money. That seems more like a fact of life rather than an opinion. With an opinion two people could have a good debate over the opinion. It's much harder to debate a fact.