PH370--_Moral_Hazard--Pt1

Moral Hazard

Occurs when health insurance leads people to take greater risks with their health or consume more healthcare than they would otherwise.

Ex ante moral hazard

Behavior changes that occur before an insured event happens and increase the likelihood of that event, such as skipping vaccinations.

Ex post moral hazard

Behavior changes that occur after an insured event happens and make recovery from that event more expensive.

Information asymmetry

A situation in which there is an imbalance in information between the insured and the insurer, affecting decision-making.

Cost-sharing

A policy solution that requires insured individuals to pay a portion of healthcare costs, thereby reducing price distortion.

Adverse Selection

A situation where insurers lack full information about the health status of those they insure, leading to poor decision-making.

Behavior change

Adjustments in actions that occur as a result of having insurance coverage, which can lead to increased risks.

Insurance pool

A group of individuals whose health risks are pooled together for the purpose of managing and distributing healthcare costs.

Social Loss from Moral Hazard

Occurs when an insurance company pays for unnecessary procedures and treatments due to the riskier behavior of the insured.

Bone-Gro

A hypothetical treatment used in the example of moral hazard, representing costly interventions that someone might choose due to insurance coverage.