The deductible feature of an insurance policy can affect the impact of moral hazard. Explain this in the context either of probability of treatment and/or amount of treatment demanded. Coinsurance, co-payments, and deductibles reduce the risk of moral hazard by increasing the expenses paid out of pocket by the consumer. With an increase in out of pocket charges, the consumer should be more conscious of how they use their insurance and what is being claimed, because they are responsible for part of the cost upfront. In return, there is a financial incentive to less claims filed. Describe the benefits to society from purchasing insurance. Describe the costs. Define and discuss the welfare gains from changes in insurance coverage. Purchasing insurance will benefit the population as a whole. It protects businesses financially from many forms of risks. If people or companies get insured, the companies providing the insurance would be relief from the potential concerns they have regarding how would cover the cost of the insured risks. With insurance individuals or companies are willing to take risks when investing money towards different types of business, knowing that there are risk factors and unfavorable outcomes but that their investment would not be a total loss. This is extremely important for all parts; the insurance company which obtains the revenues based on no claims from the individual or corporation insured, and knowing that a successful insurance business makes a healthy economy. Insurance facilitates businesses continuity and at the same time it contributes to economic growth through its investments. As the cost of health services continues to increase above the revenue of average working class salary, they would not be making enough to cover their living expenses plus health services if there was not insurance that helps alleviate some of the financial stress that paying the full cost of health services would bring if the individual was not insured.
- Fall '15