The laws of economics tell us that people who pay for medical expenses out of their own pockets will be more likely to make the effort to maintain their health through lifestyle changes. However, this does not mean that they will always do so.
In general, people’s actions are affected by incentives. When people have to pay for their health care, they have a financial incentive to take care of themselves so they will not need to consume as much health care. However, in order for this to happen, a few conditions have to be met.
First, people have to be well aware that their actions will truly lead to economic harm. If people do not know how their current habits are likely to affect them in the future, they will see no reason to change those habits.
Second, and more importantly, the perceived cost must be higher than the perceived benefit of the bad habit. For example, let us say that I really enjoy eating. In the short term, I have a significant incentive to eat as I wish because it will add to my enjoyment of life. It is guaranteed to do this. By contrast, I may not really perceive that there is much of a cost to my behavior. The harm to me from my behavior may be very far in the future. The eating might not have any economic impact on me right now. What that means is that I would have to think that the future costs that I might incur are more important to me than my current pleasure.
So, if people have to pay for their own medical expenses they might change their habits. But they will only do so if they feel that the benefits of change will outweigh the costs.