Final answer:
It is false that opting for low deductible plans will reduce monthly premiums; in reality, higher deductibles typically lead to lower monthly premiums. Deductibles, copayments, and coinsurance are cost-sharing mechanisms that reduce moral hazard by making insured individuals pay a portion of healthcare costs, which leads to lower healthcare consumption without a decline in health status.
Step-by-step explanation:
The statement that consumers should opt for low deductible plans to reduce monthly premiums is false. In health insurance, a deductible is the amount you pay for covered health care services before your insurance plan starts to pay. A copayment, or copay, is a fixed amount ($20, for example) you pay for a covered health care service after you've paid your deductible. Coinsurance is your share of the costs of a covered health care service, calculated as a percent (for example, 20%) of the allowed amount for the service. These forms of cost sharing can reduce the level of moral hazard, encouraging individuals to consume less medical care while making more considered health care decisions, as they bear a portion of the cost.
The effect of this can be substantial. Studies show that when people are responsible for moderate deductibles and copayments, they tend to use about one-third less in medical care than those with complete insurance who do not pay out of pocket, leading to lower costs overall. However, it's notable that having higher deductibles and more cost-sharing responsibilities generally leads to higher monthly premiums, which should be taken into consideration when choosing a plan.