Swiss Social Health Insurance: Co-payments work
From the perspective of an insurance community, co-payments are only interesting if they affect total expenditure by a decrease in the probability or the size of damages. If the insured take preventive actions to reduce the risk or change their behavior when damages occur, their expenditure will decrease. If insurance coverage is comprehensive, important incentives for prevention and restricting damages are absent. Economists speak of moral hazard, referring to the effect of the extent of insurance coverage on the behavior of the insured. In health insurance, the insured have a particularly large influence on the amount of services they demand. Healthy food, sufficient physical motion, prevention of stress, all these reduce the probability of an illness. Moreover, the behavior in case of an illness, i.e. the choice of therapy or the patients’ compliance with the physicians’ prescriptions will substantially affect health care expenditure. Do copayments reduce moral hazard in health insurance? Swiss social health insurance is an ideal candidate for studying this issue, as co-payments have a long tradition there.
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