What does cost-sharing in health insurance refer to?

Cost-sharing in health insurance refers to the expenses that consumers must pay out-of-pocket when they receive healthcare services, which includes deductibles, copayments, and coinsurance. This mechanism is designed to share the financial risk between the insurer and the insured, helping to limit the total costs borne by health insurance providers while encouraging consumers to use healthcare services prudently.

A primary purpose of cost-sharing is to motivate policyholders to be more mindful of their healthcare decisions, as they have a direct financial stake in the services they utilize. For example, a higher deductible often means that consumers will need to pay a certain amount out-of-pocket before insurance coverage kicks in, impacting their choice of when and how to seek medical care.

In contrast, the other options reference different financial aspects related to health insurance but do not directly define cost-sharing. Insurance premiums, for example, are the regular payments made to maintain coverage and are not considered cost-sharing since they do not occur at the point of service. Employer contributions refer to the financial support employers provide towards their employees' health coverage, and government subsidies are financial aids aimed at helping individuals afford health insurance but also do not involve direct out-of-pocket costs during service utilization.