Moral Hazard Myth Summary

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Two Harvard academics, Susan Starr Sered and Rushika Fernandopulle wrote the article The Morale Hazard Myth. They also were the two authors of a popular book that discussed health care coverage in the United States “Uninsured in America”. The article primarily discussed 2 issues in healthcare that Americans are facing. Along with Americans not having health coverage, there is also an issue of moral hazard. Moral hazard is the concept in health care that says that once someone has insurance they will overuse it and abuse health coverage. Many aspects of people’s lives are impacted when they are uninsured including their health, employment status and personal lives. The article stated it the best when it said, “Because the uninsured are sicker…show more content…
These economic concepts were scarcity and choice and self -interest. The first economic concept of scarcity and choice is seen when the authors discuss money as a limited resource. The limited resources which in this case is money by incomes that cause people to decline health insurance coverage. According to Sered and Fernandopulle, it is an individual’s choice not to get any health insurance because they cannot afford it. Sometimes it comes down to choosing to pay their bills or have proper health coverage. People that are at the poverty line can’t afford to pay such high monthly premiums and as a result decline coverage as a choice. We also see the economic concept of self-interest within the article. Often times an imbalance in the health market is created when the younger generation who is usually health doesn’t feel the need to have health coverage. For young folks it is in their self-interest to pay out of pocket only a few times if needed rather than pay monthly premiums. In the end they’ll pay less than they would for having health insurance. With those that are insured favoring a moral hazard and overusing the system could lead to a negative impact on our health care system leaving those who truly needing services paying a higher premium or
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