In health insurance, what does “cost-sharing” mean?

Cost-sharing refers to the practice of dividing healthcare costs between the insurer and the insured. This concept is fundamental to health insurance, as it outlines how costs are allocated when a healthcare service is utilized. Cost-sharing mechanisms typically include elements such as deductibles, copayments, and coinsurance, which require the insured to pay a portion of their medical expenses while the insurer covers the remaining costs.

By having cost-sharing in place, health insurers can help manage overall healthcare expenditures and encourage responsible use of services by insured individuals. It alleviates the financial burden on insurers and promotes a sense of investment by the insured in their healthcare decisions.

In contrast, the other options focus on different aspects of health insurance. For example, the total amount paid by the insurer for a claim pertains to the insurer's responsibility after cost-sharing has been applied, while negotiating lower prices with healthcare providers falls under the realm of provider contracts and pricing rather than the cost-sharing concept itself. The calculation of premium rates based on risk addresses how insurers determine the cost of coverage before any healthcare services are rendered, which is separate from the actual payment obligations once care is accessed.