If group health benefit levels are too high, what could be the end result?

When group health benefit levels are set too high, the most likely outcome is overutilization of the plan. High benefit levels can lead to members feeling less inclined to consider the cost of services since their expenses are largely covered by the insurance. This can result in individuals using health services more frequently than necessary, as the barrier to access care is significantly reduced.

Overutilization can create strain on the healthcare system, leading to increased overall costs for the insurer and potentially affecting premiums for the group as a whole. When benefits are generous, members may seek unnecessary treatments or services simply because they are easily accessible and have minimal out-of-pocket costs.

In contrast, underutilization would occur if members feel the benefit levels are inadequate, potentially leading them to avoid necessary care. Normal utilization implies a balanced approach where individuals are seeking care that aligns with their health needs without excess. Adverse selection refers to a scenario where those most likely to need healthcare are the ones most attracted to the plan, which is not directly related to the level of benefits provided. It mainly concerns the types of individuals enrolled in the plan rather than their behavior in using the benefits offered.