Insurance Companies Practice Cost-Sharing

When you visit the doctor or pay for health services, you share costs with your insurance companies. These costs are divided into;

 Coinsurance

In a Coinsurance plan, you pay a portion of the cost of the service, and the insurance company pays the rest. The policyholder is responsible for a percentage of the total bill. When you have a coinsurance plan, you will pay a percentage of the total bill, and the insurance company will pay the rest. For example, if your coinsurance is 20%, you pay 20% of the cost of the service, and the insurance company pays 80t. This applies to all non-preventative services. Coinsurance does not apply to preventative services.

Copayment

A copay is a fixed amount you share with the insurance company, regardless of the cost of the service. For example, if you have a $20 copay for a doctor’s office visit, that’s what you’ll pay, whether the visit costs $40 or $200. Copayments do not include some services, such as annual checkups and some specific forms of preventive care

Deductibles

A member must pay a deductible before the health insurance plan begins to pay for most covered products and services. Annually, the deductible is determined. Additional services, such as prescription medicines or a limited number of physician visits, may sometimes be excluded from the health insurance plan’s deductible. In the case of a $1,000 deductible, for example, enrollees are normally responsible for the whole cost of most medical treatments until they have spent $1,000.

Insurers, often at least partially regulated by the government, are usually the party that benefits most from cost-sharing because this practice helps control healthcare expenditures nationally. The government also benefits because it can negotiate lower costs with insurers by threatening to impose regulations on them. If insurance companies are forced to pay for more health care costs, they will be less willing to pay for expensive treatments or offer services that are not considered cost-effective. Insurers, therefore, are incentivized to reduce costs by denying payment for certain treatments.