What is a commonly cited advantage of high-deductible health plans?

• A. Decreases moral hazard
• B. Increases moral hazard
• C. Higher premiums
• D. No out-of-pocket costs

Answer: (A)

High-deductible health plans reduce moral hazard by making patients bear more of the initial costs before insurance kicks in. Moral hazard is the tendency to use more healthcare when the consumer doesn’t pay the full price at the time of service. By imposing a substantial deductible, HDHPs shift more cost liability onto the individual for routine care, which makes people more selective and price-conscious about what services they pursue. This design tends to lower overall utilization of unnecessary care, compared with plans that have low or no upfront costs. Since HDHPs typically feature lower premiums but notable out-of-pocket costs until the deductible is met, options characterized by no out-of-pocket costs or higher premiums don’t fit the model.