Question

Health insurance is central to any health care delivery system. The United States currently uses a mixed system of private and public insurance policies available to its citizens, depending upon age and income levels. All forms of health insurance will reduce out-of-pocket expenditures on the purchase of health care services. Out -of-pocket expenditures are typically perceived as the price of the service, and are most important when making purchasing decisions.

Insurance plans are most effective when certain conditions are met, groups of insured should be large in number and independently exposed to the risk in being insured against, losses should be accidental from the viewpoint of persons insured. In the case of health insurance, assuming an accidental nature of health incidents is often not valid, and leads to difficulties. The violation of this assumption may be classified under the heading of “moral hazard”.

For this assignment provide your insight and opinion as to how large of a problem moral hazard poses to costs associated with health insurance and health care expenditures in general. What do the consumption levels of public health services, funding for public health, and provision of services by public health agencies,have in common with the issues of health insurance outlined above?

Answer 1