Does it make any difference whether health-care expenditures are paid for by the consumer or by a third party (the government or an insurance company, for example)?
A) No; the quantity of health-care service demanded is not influenced by either the price of health care or who is paying for it.
B) Yes; consumers of health care will have a stronger incentive to economize when they are buying the service with their own money.
C) Yes; consumers of health-care services will have a stronger incentive to economize when the services are paid for by a third party.
D) No; health care is an essential service, and therefore, the incentive to economize on it is unaffected by who is paying for the service.

Question

Quizplus · Accepted Answer

When consumers pay for health care with their own money, they have a stronger incentive to economize and make cost-effective choices, as they directly bear the cost.

Does It Make Any Difference Whether Health-Care Expenditures Are Paid