Final answer:
The concept of co-payment in health insurance plans is important for reducing moral hazard and ensuring economical use of healthcare resources. While co-payments lead to less consumption of medical care, they do not negatively impact health status, thereby supporting a balanced healthcare system.
Step-by-step explanation:
The concept of co-payment in health insurance plans is designed to discourage moral hazard by ensuring that patients contribute a portion of the costs for their healthcare services. Moral hazard is reduced because with skin in the game, individuals are less likely to utilize unnecessary medical care.
When patients face moderate deductibles and co-payments, studies have shown a significant drop (about one-third less) in medical care consumption compared to those with complete insurance coverage and zero out-of-pocket expenses.
However, despite this reduced consumption, there doesn't appear to be any negative impact on health status, suggesting that higher co-payments and deductibles might not lead to worse health outcomes, but rather to a more efficient use of healthcare resources.
It's important to note that while the introduction of co-payments and deductibles can lead to a decrease in the quantity of medical care consumed, it does not necessarily lead to an increase in healthcare costs for individuals since these are offset by lower premiums or taxes.
Instead, these cost-sharing mechanisms help balance the demand for healthcare services, ensuring that patients are more conscientious about their medical care decisions without compromising their health.