What is Deductible in Health Insurance? Scientific Research and Academic Sources
Introduction
Health insurance is a vital financial tool that helps individuals cover unexpected medical expenses. One of the key terms in health insurance is ´deductible´. This article aims to explain what deductible is, how it works, and its effects on healthcare expenditures, backed by scientific research and academic sources.
Definition of Deductible
What is Deductible in Health Insurance?
Deductible is the amount of money that an insured individual must pay out-of-pocket before the health insurance company starts covering the medical expenses. This amount is usually specified in the insurance policy and is renewed annually.
Types of Deductible
Deductible can be categorized into two main types:
- Annual Deductible: The total amount that an insured individual must pay annually before the insurance coverage kicks in.
- Per-Service Deductible: The amount that an insured individual must pay for each healthcare service, usually applicable for minor healthcare services.
Effects of Deductible on Healthcare Expenditures
Research has shown that deductible has a significant impact on healthcare expenditures. High deductible amounts can lead to reduced healthcare utilization, which can have both positive and negative consequences.
Positive Effects
- Increased Cost Awareness: Deductible can encourage individuals to be more mindful of their healthcare expenses, leading to reduced unnecessary healthcare services.
- Lower Insurance Premiums: High deductible amounts can result in lower insurance premiums, making healthcare more affordable for individuals.
Negative Effects
- Delayed Treatment: High deductible amounts can lead to delayed treatment, which can worsen health outcomes.
- Unpredictable High Costs: Unexpected health problems can result in high out-of-pocket expenses, causing financial hardship for individuals.
Scientific Research and Findings
Deductible and Healthcare Utilization
A study by the RAND Health Insurance Experiment found that high deductible health insurance plans led to reduced healthcare utilization, especially among low-income individuals.
Deductible and Health Outcomes
The reduction in healthcare utilization can have both positive and negative health outcomes. While it can lead to reduced unnecessary healthcare services, it can also result in delayed treatment and worsened health outcomes, especially for low-income individuals.
Economic Analysis of Deductible
The economic analysis of deductible is crucial in understanding its impact on healthcare expenditures. Research by health economists, such as Eric French and his colleagues, has shown that deductible is a powerful tool for insurance companies to control costs and encourage responsible healthcare utilization.
Conclusion and Recommendations
Deductible is a critical component of health insurance policies, and its effects on healthcare expenditures and health outcomes are significant. Insurance companies and policymakers must carefully consider the impact of deductible on healthcare utilization and health outcomes, and individuals must carefully evaluate their healthcare needs to determine the appropriate deductible level.
References
- RAND Health Insurance Experiment
- Eric French and colleagues´ research
- Other academic articles and research findings