How is Moral Hazard related to Health Care and Health Care expense? short answer

Expert Solution

If a person has unhealthy lifestyle and in order to continue it he takes a health-insurance without disclosing the fact, then this is moral hazard of the insurance company. Since the cost of getting ill is protected by such insurance, the person gets liberty of living unhealthy lifestyle.

Health care: It is related directly, since the chance of getting ill increases. Because of such unhealthy lifestyle, the complication of healthcare increases – suppose the person is chain smoker; it creates chest infection while got admitted in the hospital; the procedure of such treatment is complicated compare to a normal chest pain.

Care expense: It increases the cost of health care too. Suppose, in the above example the cost of recovery from chest infection is higher than normal chest pain cost. It becomes a burden of the insurance company for paying such cost; sometimes it utilizes the full policy limit.

Rahul Sunny answered 2 years ago

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How is Moral Hazard related to Health Care and Health Care expense? short answer

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