Moral Hazards Of Health Insurance

Health insurance is a type of insurance that typically covers an insured person’s medical and surgical expenses. The insured person could either pay costs out-of-pocket and then they are reimbursed by their insurance company or the insurance company would pay the costs directly to the healthcare provider. The provider is a clinic, hospital, doctor, laboratory, health care practitioner or a pharmacy. (Nordqvist 2012). Medical assistance would be required in every individual’s life at some point in their lifetime. Which is why the question then is raised whether health insurance should be a basic human right afforded to the general population or if it should be a product that is marketed. In some countries such as Norway and Canada, the government

Moral Hazard is best explained with an analogy. For instance, we believe that all the safety features on our cars such as airbags, seatbelts, brake paddle, etc., make us safe on the road. Therefore we believe that we are safe and are more likely to drive riskier because of the belief that there is a “safety net”. Imagine all the safety features being taken off, meaning, that there will be no seatbelt or any other things that make the car “safe”, instead, there will be a dagger pointing directly to the driver’s chest. The result of this experiment, the driver would drive much more carefully and will take all precautions knowing that they have no safety feature to protect them. This is moral hazard. The ability for individuals to partake in riskier behaviours because they have health insurance. This is a major problem for Health insurance companies because they need to make a profit at the end of the day and do not need to take on clients that engage in risky behaviours. Another major problem with health insurance is adverse selection. Adverse selection is the tendency of insurance to attract those who are more likely to use it (Ward, 2016). Because the insurer is not aware of whether they are taking on riskier patients or not, the way that these issues are currently being dealt with is by the insurer offering cheap health insurance to

While the U.S has coverage for special groups such as seniors and veterans. The Obama administration has also made some advances by introducing laws mandating everyone to have some type of insurance (Nordqvist 2012). Despite all these advances, the number of insured people in the states is still low. The health of the population is worse than countries with universal insurance and it has been estimated that private insurance actually costs the government more money than those who have universal insurance. 32 out of 33 developed nations have some sort of universal healthcare with the U.S being an exception. The U.S really needs to reevaluate the health of its population and consider providing universal insurance coverage for its citizens because for a country of its caliber, to not have a developed healthcare system is quite