Comment by roymurdock | Hacker News Reader

Comment by roymurdock | Hacker News Reader

Their explanation of moral hazard [1] is incorrect. A moral hazard occurs when someone who is insured subsequently pays less attention to preventing the deterioration/damage of the ensured object, in this case one's own body, than would otherwise be the case if they did not have insurance.

People do not pay less attention to their health because they know they are insured. Nobody wants to be sick or obese, and it is an absurd, academic, and out-of-touch to argument. It makes sense to apply the moral hazard concept to something like a car (driving recklessly if insured) but not something so integral as personal health.

Health care costs exploded because people (myself included) are weak-willed and uneducated, and will satiate their cravings for sweet/salty/mind-altering without a strong government to provide adequate health education, curb the bombardment of junk food/tobacco/alcohol/drug advertising, subsidize healthy lunches in school, and keep pharma regulatory capture in check.

Does anyone think: "I'll eat McDonalds twice a week, smoke a pack a day, and drink all I want because I'm insured." Come on...

[1] "the tendency for insured persons to utilize medical services more than they would if they did not have insurance"

OP describes two separate aspects of moral hazard. You explain the first "I'll smoke all I want because I'm insured" which OP admits is the less important of the two aspects (although I'd bet most people who have even been uninsured for a period of time can relate to the extra fear of going skiing, renting a moped while traveling, or something similar).

The second aspect is what you cite in your footnote and falls in line with the definition of moral hazard, which more accurately is increased risk-taking due to not directly bearing the cost of those risks. In this case the "risks" taken are, for example, check-ups and preventative treatments which may or may not have a benefit justified by the cost.

I see your point, but I'd posit that the second aspect is the opposite of how moral hazard is normally taught and explained, which is a ratcheting up of risk due when one is insured, rather than an overuse of some public good, which is normally thought of as a tragedy of the commons: I have access to a public good, I may as well milk it for all its worth. Tragedy of the commons does not affect how somebody treats their own body.

At a higher level though, you need to look at what is actually driving healthcare costs. Is it the (relatively) inexpensive but overused checkup/preventative costs, or is it the expensive and overused prolonged treatments for preventable/chronic diseases such as type-2 diabetes, lung cancer, heart-attack/stroke, etc.

Eighty-six percent of all health care spending in 2010 was for people with one or more chronic medical conditions.

http://www.cdc.gov/chronicdisease/overview/index.htm

No one is arguing that uninsured people would use more preventative care, right?

How is their explanation incorrect? Your explanation is simply a rewording of theirs. Of course, apart from that you are disagreeing that it exists at all for health insurance. But the fact that consumers have "skin in the game" as it were in addition to the insurance doesn't mean there's no potential for moral hazard. No doubt, if there were no personal wellbeing implications of treating yourself unhealthily, moral hazard would be even more severe, but it still exists in some non-zero quantity as long as you have insurance. Does it explain all the effects that the article claims it explains? Not necessarily.

Grandparent is making a distinction between, "I'll engage in less healthy behavior because I'm insured" vs. "I will use more health care because I am insured."

The latter doesn't imply the former.

> Does anyone think: "I'll eat McDonalds twice a week, smoke a pack a day, and drink all I want because I'm insured." Come on...

No, they will think like well I have earned through hard work to enjoy simple pleasures of life. Expectation is government or someone should take care of them with that bazillion dollar healthcare budgets.

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