Moral Hazard and Health Disparities

Moral hazard refers to a form of a situation whereby a particular party involves itself risky activity knowing that it has protection against that specific risk. In most instances, the other party ends up incurring the cost. This situation comes about as a result of the two parties having little known information which proves to be insufficient about each other.  In the case of health care provision, moral hazard comes about when the health care beneficiaries get an incentive act to act in more risky activities predisposing them to health risks just because they have an assurance that the government will pay for their medical insurance (Fletcher, 2016). An example may be in a case whereby someone has a health condition related to their behavior like maybe in the case of tobacco smoking but has no insurance coverage. This gives an implication that in case of any mishappenings, the person will be the one to incur the cost and will tend to be more careful and attentive. On the other hand, if the government insures the individual to a medical cover the person is more likely to smoke tobacco in large amounts knowing that someone is paying for their medical insurance. I agree with this the concept of moral hazard because nobody likes to incur costs when they see that they will be the ones paying for the costs but, when it is someone else paying or suffering the cost, people tend to be less careful and attentive to mess up.

The main determinants in health disparities are social factors, biology and genetics, health services, individual behavior and policy-making (Fletcher, 2016). They can be modified to improve overall healthcare and health equity. For example, in the case of policymaking, the population is affected by federal, state and local Cadillac policies. An example could be, setting out policies to increase price and taxes on some of the known harmful substances like tobacco. There will be a reduction in tobacco consumers and thus reduced health-related cases, and improved quality of life.the policies will affect individual behavior. Healthcare, on the other hand, can be modified by providing quality services and programs aimed at serving the interests of the vulnerable population. An example is the introduction of Medicaid and Medicare which has primarily contributed to health equity in the US.

According to the kind of observations I have seen in the healthcare system, I feel that the interrelationships within these determinants determine the overall health of a person. Therefore I think that policymaking is the most significant determinant that will be the ultimate solution to realizing improved health. Efficient policies will make people more careful and reduced health hazards.




Fletcher, R. A. (2016). Keeping up with the cadillacs: What health insurance disparities, moral hazard, and the cadillac tax mean to the patient protection and affordable care act. Medical anthropology quarterly, 30(1), 18-36.