Final answer:
The false statement about health insurance is that paying for it is always cheaper than paying out-of-pocket for medical expenses. Cost-sharing elements like deductibles, co-payments, and co-insurance can help mitigate moral hazard and reduce healthcare expenditure without impacting health status. therefore, option B is correct
Step-by-step explanation:
The statement "Paying for health insurance is always cheaper than paying for your own medical expenses" is false. Health insurance is designed to reduce the financial risk associated with large medical expenses; however, it is not categorically cheaper than paying out-of-pocket. This is because some people may not use their insurance enough to justify the cost of premiums, especially if they are generally healthy. On the other hand, those facing frequent or high-cost medical procedures may find insurance essential for financial predictability and risk management.
Insurance plans offer a variety of premiums and deductibles, which allow individuals to choose their level of financial exposure. Cost-sharing mechanisms like deductibles, co-payments, and co-insurance exist in many health plans. These not only reduce moral hazard (where insured individuals may consume more healthcare than necessary) but also make users at least partly accountable for the cost of their medical care. As one study showed, moderate deductibles and co-payments led to one-third less consumption of medical care without a noticeable difference in health status, indicating that these cost-sharing methods can effectively reduce excessive use of healthcare services without detriment to health.