1. Sounds promising, but are there downsides to high-deductable health plans? 2.

Question

1. Sounds promising, but are there downsides to high-deductable health plans?

2. If given a choice of enrollment in a high deductible plan versus a more traditional (and more expensive) plan, what kinds of employees will choose one over the other? What are the potential problems associated with this kind of selection?

3. Assume that enrollees use less medical care while covered by a high deductible plan that they use with a traditional plan. Describe the difference in utilization between the two plans. Is the difference waste? Is it "moral hazard?"

Explanation / Answer

1). High-deductible health plans (HDHPs) are an increasingly common strategy to contain health care costs. Individuals with chronic conditions are at particular risk for increased out-of-pocket costs in HDHPs and resulting cost-related underuse of essential health care.

2). Health insurance is becoming necessary around the world, which means some people have to purchase insurance for the very first time in some instances. Not everyone needs the same level of insurance as others do, which is why some people may consider the purchase of a high deductible health plan. These health plans often cover many minor issues with small co-pays, but with major issues, such as a surgery, much of the cost would have to be paid by the patient. In return, these plans often have a lower cost.

PROS : High deductible plans also allow you to meet health plan stipulations that your community may have.

For those that are self-employed, high deductible plans allow people to purchase health insurance even though they don

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