I still feel E is the right answer rather than A. This is an "Except" question. So 4 of the answers might account for the free-day-care plan's lack of success, and 1 might not.
Option (B) - Parents declined use of day care. Clearly, it accounts for the free day care plan's failure.
Option (C) - Day care is noisy, hot, and uncomfortable. So maybe parents declined use of day care. It accounts for the free day care plan's failure.
Option (A) - Many parents employ nannies. So those parents did not use day care. So, this also clearly accounts for the plan's failure.
Option (D) - Flu season might result in more sickness, maybe severe sickness. Parents may want to keep sick children at home rather than at a daycare. So again, it accounts for the plan's failure.
Option (E) - Increase in employees neither necessarily indicate increase in participation, nor lack of participation in the plan. No information is given to make any call here.
Also note that the question is NOT to account for the increase in no. of employees calling in sick, so inferring that "increase in employee count might have increased the no. of people calling sick" is irrelevant. Instead, the question is to account for the lack of success of the day care's plan. The day care's plan was to reduce the no. of employees calling in sick (2nd sentence of the argument). Option (A), (B) and (C) indicates lack of participation in the plan, resulting in non-reduction of employees calling in sick. Option (D) indicates possibility of increasing it. Option (E) is the only option that doesn't carry sufficient information to draw any inference.
The conclusion is around implementation of free day care plan causing the reduction. People who were using nanny services before the program may have continued using their service. So the daycare program did not change their existing routine, and hence indicates lack of success of the day care plan. So (A) cannot be the correct answer.
Please share your thoughts!!