I agree with the author’s point of view that health insurance tends to change the purchasing decisions of consumers. Moral hazard occurs when a person’s behavior or state of mind is affected by the presence of insurance coverage, in a way that rises the risks of costs for the insurer because the insured person is no longer liable for the full costs. The insured consumers are likely to be careless and take greater risks, knowing that the claim will be covered by the insurer. I believe that the risk of moral hazard can be reduced by increasing the out-of-pocket costs of the insured through larger co-payments, co-insurance, high-deductibles, and other restrictions. This decreases their incentive to consume expensive and unnecessary healthcare.
