Final answer:
Voluntary committed cost sharing is a strategy to reduce moral hazard by having insurance policyholders pay a portion of the costs, via deductibles, copayments, or coinsurance. This reduces unnecessary claims and services consumption without negatively affecting health outcomes.
Step-by-step explanation:
Voluntary committed cost sharing is a method used to reduce moral hazard in insurance policies. This approach involves the injured party or insurance policyholder contributing a share of the costs, which can take different forms such as deductibles, copayments, and coinsurance. A deductible is an upfront amount that the policyholder pays out of pocket before insurance coverage kicks in, a copayment is a fixed sum paid for a specific service like a doctor's visit, and coinsurance is when the insurance company covers a certain percentage of the cost, leaving the policyholder responsible for the remaining percentage.
Each of these cost-sharing methods encourages policyholders to be more mindful of their insurance claims and consumption of services, as there is a direct cost to them associated with filing a claim or receiving services. Studies have shown that when facing moderate deductibles and copayments, people consume about one-third less in medical care, possibly because of the deterrent effect of having to pay out of pocket. However, it's important to note that consuming less care didn't negatively impact health status, indicating that voluntary committed cost sharing can be effective at reducing excessive use without harming patient health.