Question

What has a larger effect on reducing moral hazard, a deductible or coinsurance?

What has a larger effect on reducing moral hazard, a deductible or coinsurance?

Homework Answers

Answer #1

Deductible is a method in which a large portion of the bills are paid by the insurance after deducting the obligatory payment.

Coinsurance refers to a percentage of the bill paid by your insurance plan and a smaller perfectage of it being paid by you.

Deductible has a larger effect on reducing moral hazard as when it comes to a larger bill, there is a fixed amount that you have to pay rest covered by the insurance. And it also resets yearly. Therefore this has a larger effect when compared to coinsurance.

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