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We describe research on the impact of health insurance on healthcare spending (“moral hazard”), and use this context to illustrate the value of and important complementarities between different empirical approaches.
The theory of moral hazard implies that if policyholders’ costs drop to zero with single-payer, publicly-funded universal health insurance, demand and expenditures would become infinite. The theory questions the merit of any health insurance.
When insured individuals bear a smaller share of their medical care costs, they are likely to consume more care. This is known as "moral hazard." In addition, when individuals who have a choice among insurance plans select their plan, those who are more likely to require care tend to choose more generous plans. This is known as "adverse selection."
Health economists are divided on their understanding and conceptualization of moral hazard in health insurance and we show that these divisions can be organized along two main questions: one on the nature of demand for health care and one on the nature of demand for health insurance.
- Michel Grignon, Jeremiah Hurley, David Feeny, Emmanuel Guindon, Christina Hackett
- image/png, 47k
- 2018
problemis known as moral hazard. Demand and supply management policies in health care attempt to control moral hazard while partly insuring consumers against the risks of illness. 2 In the 1960’s, the health economics literature adopted the term moral hazard to describe the
May 3, 2018 · We describe research on the impact of health insurance on healthcare spending (“moral hazard”), and use this context to illustrate the value of and important complementarities between...
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We define moral hazard as the slope of health care spending (with respect to price), and by “selection on moral hazard” we refer to the component of adverse selection that is driven by heterogeneity in this slope parameter.
