most major health insurance policies have a deductable and coinsurance features. What are the purposes of such system? Are they necessary? What are the expected effects and problems that could arise as a result of implementing such system?
It's fairly common knowledge among adults that no one really values something that is completely free. If someone has to put in at least SOME of his/her own money, then
~ he/she will think before using it (that is not just taking it for granted, and in this case, not running to the doctor for every little sniffle)
~ he/she will truly FEEL that he/she has a stake in this, that he/she needs to use it wisely.
(In my opinion above, "it" can refer to health insurance, education, or whatever people need to NOT take for granted.)
Now ... how will YOU answer these questions?
Perhaps you have heard the expression: "You get what you pay for." That, then, is no surprise when you pay nothing to essentially get nothing!
Sra
The purpose of a deductible and coinsurance in health insurance policies is to share the cost of healthcare between the insurance provider and the policyholder. Here's how they work:
1. Deductible: A deductible is the amount of money that the policyholder must pay out of pocket for covered healthcare services before the insurance provider starts paying. For example, if you have a $1,000 deductible, you would need to pay for the first $1,000 of covered services before your insurance kicks in. The purpose of the deductible is to encourage policyholders to take responsibility for their healthcare costs and prevent overutilization of medical services.
2. Coinsurance: Once the deductible is met, coinsurance is the percentage of the cost of covered services that the policyholder is responsible for paying, while the insurance provider covers the remaining percentage. For instance, if you have a 20% coinsurance, you would pay 20% of the cost while the insurance company covers 80%. The purpose of coinsurance is to continue sharing the cost of healthcare between the policyholder and the insurance provider.
Are they necessary?
Deductibles and coinsurance are necessary components of health insurance policies for several reasons:
1. Cost-sharing: They encourage policyholders to be financially invested in their healthcare decisions and make more informed choices.
2. Affordability: Deductibles and coinsurance help keep insurance premiums lower since the policyholder contributes a portion of the expenses.
3. Risk management: These features protect the insurer from excessive claims and help maintain the long-term sustainability of the insurance system.
Expected effects and problems:
While deductibles and coinsurance serve important purposes, they can also have certain effects and potential problems:
1. Financial burden: High deductibles and coinsurance can become a financial burden for policyholders, especially those with chronic conditions or who require expensive treatments.
2. Healthcare access: Cost-sharing may deter individuals from seeking necessary medical care, particularly preventive services, if they can't afford the out-of-pocket expenses.
3. Adverse selection: Some healthier individuals may choose to opt-out of insurance or select plans with lower cost-sharing, leaving a sicker and more expensive population to be covered by the insurance provider, potentially impacting the stability of insurance premiums.
4. Inequality in access: Deductibles and coinsurance could disproportionately affect lower-income individuals, leading to unequal access to necessary healthcare services.
It is essential to strike a balance between cost-sharing and ensuring affordability, accessibility, and equity in healthcare coverage.