Moral Hazards in Health Care Insurance

Introduction

Moral hazard refers to the additional health care insurance that needs to be purchased when the person becomes insured (Adeyele and Ogungbenle, 2019). The aim of the study is to analyse the moral hazards in health care insurance, where the insured person face difficulties in getting proper insurance converge in the health and social care institutions. The study provides a scope to discuss over the moral hazard example taken place in the health care system and the suggesting the way through which the issues related to the health care insurance can be mitigated well. Additionally, this research may also serve as a valuable resource for those seeking healthcare dissertation help.

Moral hazards

According to the economists, additional health care purchase is considered to be inefficient because they represent the care that is worthless to the consumers than it costs to produce. In this situation of moral hazard in health insurance, one party to an agreement engages in risk behaviour or fails to act in good faith because that party needs to bear the consequences of that behaviour (Khorasani et al., 2016). For example, if the insured person spends one extra day in the hospital, he or she needs to pay extra amount on the purchase of health care service. Hence, co-pay is one of the major examples of moral hazard for which the insured person faces difficulties during the payment method. Secondly, asymmetric information is another issue regarding health insurance where the insured person is facing challenges due to moral hazards (Einav and Finkelstein, 2018). The insurer does not share appropriate information with the insured person and for which they face difficulties in getting the benefits. Deduction of the same amount in the insurance coverage is another issue, where the insurer does not pay the whole amount of the hospital bills and there are a deductible amount which needs to be paid by the insured personal and this is another major issue for the insured person during utilising their health insurance policy (Barati et al., 2018). Taxation on the premium amount is another issue, where the insured person needs to pay extra charges due to taxation on the insurance premium. Extra higher charges, asymmetric information, higher payment for extra bill at the hospital and taxation on the insurance premium are the major moral hazards in case of the health insurance.

Impacts of moral hazard

The insured person faces difficulties due to higher charges which need to be borne by that person only. There arises a trust issue among the insured person where the persona cannot trust and rely on the insurance company and for which the insurers fail to retain the long run consumers in the health and social acre system (Andoh-Adjei et al., 2018). The insured person becomes confused while getting the benefits and the deductible amount needs to be paid by the insured person at the hospital. The insured person cannot deny paying the amount at the hospital and this creates difficulties for the insured person to get appropriate benefits.

Suggesting ways of preventing moral hazard

It is necessary to provide all the information to the insured person regarding the taxation on premium and the actual benefits of the insurance policy. The insurer must provide all the benefits related to insurance and pay the total hospital bill without any deductible amount. The insurer also needs to cut taxation on insurance premium so that the insured person can afford that and get actual benefits.

Conclusion

Moral hazard in insurance may hamper the benefits of the insured person and in this regard it is necessary to mitigate the issues related to health insurance through tax cut, providing all the necessary information and paying the total amount for maximising the values for the insured person.

Reference List

Barati, M., Azami, F., Nagdi, B., Foladi, M., Hajimaghsoudi, M. and Asadi, S.A., 2018. Moral Hazards in Providing Health Services: A Review of Studies. Evidence Based Health Policy, Management and Economics, 2(1), pp.61-69.

Adeyele, J.S. and Ogungbenle, G.M., 2019. Moral hazards and service delivery: evidence from national health insurance scheme in Jos metropolis. IFE PsychologIA: An International Journal, 27(2), pp.99-109.

Khorasani, E., Keyvanara, M., Etemadi, M., Asadi, S., Mohammadi, M. and Barati, M., 2016. Insurance companies’ point of view toward moral hazard incentives. Journal of medical ethics and history of medicine, 9.

Einav, L. and Finkelstein, A., 2018. Moral hazard in health insurance: What we know and how we know it. Journal of the European Economic Association, 16(4), pp.957-982.

Andoh-Adjei, F.X., Boudewijns, B., Nsiah-Boateng, E., Asante, F.A., van der Velden, K. and Spaan, E., 2018. Effects of capitation payment on utilization and claims expenditure under National Health Insurance Scheme: a cross-sectional study of three regions in Ghana. Health economics review, 8(1), p.17.