Tag: Moral Hazard

Madison, Wisconsin / USA - April 24th, 2020: Nurses at Reopen Wisconsin Protesting against the protesters protesting safer at home order rally holding signs telling people to go home.

Great Responsibility: Navigating Moral Hazards During COVID-19

The Petrie-Flom Center Staff Leave a comment

By Jacqueline Salwa

Younger people may be driving the COVID-19 pandemic in part because they perceive the costs of complying with public health measures as higher and the expected benefits as lower compared with older individuals.

”Indemnifying Precaution: Economic Insights for Regulation of a Highly Infectious Disease,” a paper recently published in the Journal of Law and the Biosciences, explores how to align costs and benefits so that individuals of all ages adhere to precautions.

Younger people tend to experience less severe symptoms from COVID-19 infection, and may be disproportionately affected by other aspects of the pandemic.  These include depression from lack of social interaction, stifled career advancement, and difficulties with providing for dependents.  Compared to younger people, older people have a greater chance of being settled down, retired, and not responsible for dependents. As a result, those that  receive the least benefit from taking precautions, and incur the greatest personal costs for abiding by these precautions, have a lack of incentive to follow precautionary public health measures. This is known, in economic terms, as a moral hazard.

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corridor with hospital beds

Hospitals Bear the Costs of Detention and Incarceration

The Petrie-Flom Center Staff Leave a comment

By Blake N. Shultz and Pooja Agrawal

While individuals with recent criminal justice involvement represent only 4.2% of the population, they make up 8.5% of all emergency department (ED) expenditures, which translates to an additional $5.2 billion in annual spending across the health care sector.

The federal government has complete control over access to medical care for incarcerated individuals and immigrants in detention facilities, and is primarily responsible for the quality of the sanitation, nutrition, and shelter accommodations. Despite this level of control, conditions in many detention facilities and prisons are exceptionally poor.

Over eighty percent of recently released prisoners are uninsured, and upon re-entry into society they struggle to obtain quality medical care for both pre-existing conditions and those that may have been caused or exacerbated by detention.  As they often do not have a medical home, upon release many will present to emergency departments (EDs) for their health care needs, and, because of the low rates of insurance coverage, hospitals are left to pick up the bill for the gaps in care created by the government’s deficiencies.

The disaggregation of government detention facilities and financial responsibility for downstream health care costs of released individuals creates a “regulatory moral hazard,” in which the government has little incentive to invest in the health and health care of incarcerated and detained individuals. In the absence of federal reform incentivizing investment and reducing cost-shifting to the health care sector, hospital systems should build interdisciplinary care teams focused on formerly incarcerated and detained individuals while investing in comprehensive, community-based health care.

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A calculator, a stethoscope, and a stack of money rest on a table.

Why Our Health Care Is Incomplete: Review of “Exposed” (Part II)

Daniel Aaron 2 Comments

By: Daniel Aaron

Just last month, Professor Christopher T. Robertson, at the University of Arizona College of Law, released his new book about health care, entitled Exposed: Why Our Health Insurance Is Incomplete and What Can Be Done About It. Part II of this book review offers an analytical discussion of “cost exposure,” the main subject of his book with a focus on solutions. Read Part I here.

Baby solutions

Prof. Robertson writes two chapters on solutions. In the first, titled “Fixes We Could Try,” he offers reforms, from mild to moderate, that would make cost exposure less harmful. The chapter largely retains the analytical nature of the prior chapters, but it comes across like a chapter he might have rather not written. This is evident in the following chapter’s title, “What We Must Do.” It’s also evident because some of the proposals do not seem fully considered, and in some ways appear more controversial than the more comprehensive solution offered later. Read More

A calculator, a stethoscope, and a stack of money rest on a table.

Why Our Health Care Is Incomplete: Review of “Exposed” (Part I)

Daniel Aaron Leave a comment

By: Daniel Aaron

Just last month, Professor Christopher T. Robertson, at the University of Arizona College of Law, released his new book about health care, entitled Exposed: Why Our Health Insurance Is Incomplete and What Can Be Done About It. This book review will offer an analytical discussion of “cost exposure,” the main subject of his book.

What is cost exposure in health care?

Cost exposure is payments people make related to their medical care. There are many ways patients pay – here are a few common ones.

  • Deductible – Patient is responsible for the first, say, $5,000 of their medical care; after this point, the health insurance kicks in. Resets each year.
  • Copay – Patient pays a specific amount, say $25, when having an episode of care.
  • Coinsurance – Patient pays a specified percentage, say 20%, of care.

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