What is the problem of Moarl Hazard in Health Insurence? Why do economists and o
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What is the problem of Moarl Hazard in Health Insurence? Why do economists and other health policy analysis worry about the impact of Heath Insurance of different kinds on the size and type of demand for personal Health Care Services in the US economy? What is the problem of Moarl Hazard in Health Insurence? Why do economists and other health policy analysis worry about the impact of Heath Insurance of different kinds on the size and type of demand for personal Health Care Services in the US economy?Explanation / Answer
Moral Hazard is basically the extra health care policy, which gets indirectly linked to the consumer, when he gets insured. For example: if an insured consumer spends an extra day in hospital, it is a moral hazard. These kind of policies are usually not appreciated by the health economists as their return on investment is quite low. This is again considered as a moral hazard as additional spending on health insurance is considered as an overall welfare loss for the society. So, generally economists feel that this moral hazard must be avoided.
The economists and other health policy analysts usually worry about the impact of health insurance, as they are considerate about the value for money and the return on investment constraint for the consumer. The type of demand and the size of insurance policy must be consumer specific and based on his probable diagnosis, otherwise the consumer will pay for extra policy, which is not required as well as desired. The overall wellness cost gets high and the wellness value decreases in such a context and hence it is important that the size and demand of health insurance must be chosen with extra caution.
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