Raising the deductibles and copayments is a way of dealing with the

Question

Quizplus · Accepted Answer

Raising deductibles and copayments is a way of dealing with the moral hazard problem of health insurance. When the patients have to bear a higher share of the healthcare cost, they become more conscious of their healthcare choices and costs, which helps to reduce unnecessary healthcare utilization and associated costs. Adverse selection refers to the situation where the individuals with a higher risk of health problems are more likely to purchase health insurance, while asymmetric information refers to the situation where one party has more information than the other party (in this case, doctors may have more information about the appropriate treatment). Externalities refer to the situation where the healthcare consumption or provision affects people who are not directly involved in the transaction.

Raising the Deductibles and Copayments Is a Way of Dealing