Principles of Microeconomics / Unit 15 MIC 1407 short lesson, about 20 seconds
Moral Hazard
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The idea
Moral hazard is insured people taking more risk, since the insurer pays. It is reduced, not removed, by fraud investigation, monitoring and cost sharing: a deductible, copayment or coinsurance.
In practice
A three-thousand claim, five-hundred deductible, twenty percent coinsurance: the patient pays one thousand.
Where people slip
The cause is imperfect information; paying providers per service invites more services than a fixed fee per patient.
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