Distinguishing Moral Hazard from Access for High-Cost Healthcare Under Insurance

PLOS One, doi:10.1371/ journal.pone.0231768 (Apr. 17, 2020)

Arizona Legal Studies Discussion Paper No. 20-18

18 Pages Posted: 25 Apr 2020

See all articles by Christopher T. Robertson

Christopher T. Robertson

University of Arizona - James E. Rogers College of Law; Harvard University - Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics

Andy Yuan

University of Arizona - Department of Economics

Wendan Zhang

affiliation not provided to SSRN

Keith A. Joiner

University of Arizona - College of Medicine

Date Written: April 17, 2020

Abstract

Health policy has long been preoccupied with the problem that health insurance stimulates spending (“moral hazard”). However, much health spending is costly healthcare that uninsured individuals could not otherwise access. Field studies comparing those with more or less insurance cannot disaggregate moral hazard versus access. Moreover, studies of patients consuming routine low-dollar healthcare are not informative for the high-dollar healthcare that drives most of aggregate healthcare spending in the United States.

We test indemnities as an alternative theory-driven counterfactual. Such conditional cash transfers
would maintain an opportunity cost for patients, unlike standard insurance, but also guarantee access to the care. Since indemnities do not exist in U.S. healthcare, we fielded two blinded vignette-based survey experiments with 3,000 respondents, randomized to eight clinical vignettes and three insurance types. Our replication uses a population that is weighted to national demographics on three dimensions.

We found that most or all of the spending due to insurance would occur even under an indemnity. The waste attributable to moral hazard is undetectable. We conclude that for high-cost care, policymakers should be more concerned about the foregone efficient spending for those lacking full insurance, rather than the wasteful spending that occurs with full insurance.

Keywords: health insurance, moral hazard, healthcare, uninsured, indemnities,

Suggested Citation

Robertson, Christopher T. and Yuan, Andy and Zhang, Wendan and Joiner, Keith A., Distinguishing Moral Hazard from Access for High-Cost Healthcare Under Insurance (April 17, 2020). PLOS One, doi:10.1371/ journal.pone.0231768 (Apr. 17, 2020); Arizona Legal Studies Discussion Paper No. 20-18. Available at SSRN: https://ssrn.com/abstract=3581201

Christopher T. Robertson (Contact Author)

University of Arizona - James E. Rogers College of Law ( email )

P.O. Box 210176
Tucson, AZ 85721-0176
United States

HOME PAGE: http://www.law.arizona.edu/faculty/getprofile.cfm?facultyid=714

Harvard University - Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics ( email )

23 Everett Street
Cambridge, MA 02155
United States

Andy Yuan

University of Arizona - Department of Economics ( email )

McClelland Hall
Tucson, AZ 85721-0108
United States

Wendan Zhang

affiliation not provided to SSRN

Keith A. Joiner

University of Arizona - College of Medicine ( email )

Department of History
Tucson, AZ 85721
United States

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