The American healthcare industry is large and sprawling. Largely due to the fact that much of it is managed at the state level (as opposed to federal... think o

The American healthcare industry is large and sprawling. Largely due to the fact that much of it is managed at the state level (as opposed to federal... think of this as the difference between Germany’s healthcare vs what the EU provides). Deductibles are part of some insurance plans but copays are part of all. Deductibles are generally large but capped by an out of pocket maximum. These are generally on plans that provide a high degrees of network freedom, meaning you can self-refer to a specialist. Because you are not a medical expert, there is added risk to the insurer that you are seeking unnecessary procedures and so they ask you to share the risk by paying a deductible. These are typically the PPO (preferred provider organization). There is another type of organization, an HMO (health maintenance organization) whereby you must get referred by your primary care physician, thus serving as a check on the risk. In HMOs, there is generally no deductible. There are still copays though, but they are generally small. For example, I just broke my finger and needed surgery to set the fracture. It was $20k surgery. My HMO negotiated it down to $8k and I paid a $30 copay. Had it been a PPO, I’d have paid well over $2000. As for why there are copays... they actually are there to dissuade hypochondriacs and drug seeking (aka moral hazards). This is a delicate market price though that needs to be high enough to prevent the hazard but not high enough to dissuade against necessary procedures.