4.How does health insurance coverage affect the incentive to reduce medical expenses? For the insured person?...

4.How does health insurance coverage affect the incentive to reduce medical expenses? For the insured person? For the provider of services? What happens to the incentive to hold down medical expenses once the initial insurance deductible is met?

Expert Solution

Health insurance plan covers part of the medical expenses; and usually cover between 60% and 90% of the covered expenses after you’ve met the deductible. The person pays nearly 10% and 40% of the costs as copayments. These copayments involve a fixed amount of money that a person pays every time they would be receiving a given health care service. These payments reduce the incentive of the insured person with a health insurance to seek unnecessary health care service, and thus reduce medical expenses. For the provider of services it reduce medical expenses by addressing the problem of adverse selection in the health insurance market. Deductibles involve a fixed premium amount that a person must before they use a health insurance plan to cover their treatment cost, and once these are met it reduces to hold down medical expenses

Rahul Sunny answered 2 years ago

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