The Effects of a Coinsurance Rate Increase

Determine the effects of a coinsurance rate increase.

Consider a health insurance plan that covers hospital care. Imagine that the plan has allowed its members to use hospital care at no out-of-pocket cost. Now the plan institutes a 10% coinsurance payment for the first $10,000 of hospital billings per member per year. Describe how raising the coinsurance rate from 0% to 10% will affect the use of emergency hospital care by members who remain enrolled in the health plan, the use of elective hospital care by members who remain enrolled in the health plan, etc.