Jump to ContentJump to Main Navigation
Incentives and Choice in Health Care$
Users without a subscription are not able to see the full content.

Frank A. Sloan and Hirschel Kasper

Print publication date: 2008

Print ISBN-13: 9780262195775

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262195775.001.0001

Show Summary Details
Page of

PRINTED FROM MIT PRESS SCHOLARSHIP ONLINE (www.mitpress.universitypressscholarship.com). (c) Copyright The MIT Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in MITSO for personal use.date: 21 September 2021

Adverse Selection and Moral Hazard: Implications for Health Insurance Markets

Adverse Selection and Moral Hazard: Implications for Health Insurance Markets

Chapter:
(p.103) 5 Adverse Selection and Moral Hazard: Implications for Health Insurance Markets
Source:
Incentives and Choice in Health Care
Author(s):

Mark V. Pauly

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262195775.003.0005

This chapter explores two key issues in the health insurance market: adverse selection and moral hazard. It first describes ideal insurance to serve as a benchmark for comparing insurance in the presence of moral hazard and adverse selection. Given moral hazard, there is a rationale for high-deductible plans, such as the typical Health Savings Accounts, but the tax treatment of employer-provided health insurance benefits poses an impediment to the diffusion of such plans. These employee benefits are currently excluded from employees’ income for the purposes of the U.S. federal personal income tax. In contrast to moral hazard, adverse selection is a “paper tiger,” more important in theory than in practice in in health insurance. Nevertheless, adverse selection may be a significant phenomenon in other markets, depending on their specific characteristics. The chapter also considers the effects of cost sharing on health care.

Keywords:   health insurance, adverse selection, moral hazard, Health Savings Accounts, employee benefits, income tax, cost sharing, health care

MIT Press Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us.