Examples Of Moral Hazard In Health Care

Moral hazard in the thought of health care means that patients are more likely to utilize services at a greater rate, because the financial costs aren’t a direct burden to the patient. A good example of this in action which was presented in class was the Rand Health Insurance Experiment. It was seen that the average annual charges incurred per capita increased with a lowered cost sharing. The effect of this means that a patient might want to utilize more expensive, although non-marginally beneficial services when they are fully insured. The demand for health care utilization will be increased due to this concept of moral hazard.

Both the benefit and drawbacks of moral hazard in health care can be argued for. For example, cost-sharing and