Health insurance companies impose deductibles on policies and co-payments on claims

Question

Quizplus · Accepted Answer

Health insurance companies impose deductibles and co-payments to reduce moral hazard problems. Moral hazard refers to the tendency of people to engage in riskier behavior or overuse medical services when they are insured, since they are not bearing the full cost of their actions. By imposing deductibles and co-payments, insurance companies hope to encourage their customers to be more selective and cautious in their use of medical services, and thus reduce overall costs.

Health Insurance Companies Impose Deductibles on Policies and Co-Payments on Claims