Moral Hazard
A conservative talking point around the longstanding health care reform debate has been that providing insurance coverage to Americans drives up health care costs because of what is called “moral hazard”. It is an economic term meaning there is an artificial shift up in the demand curve for goods or services because of an incentive. The assertion is that too many Americans seek health care largely because they have coverage to pay for it, not a real medical need.
This has never, to my mind, really been proven. For example, how many men do you know who clamor to go to regular physician office visits because they have coverage? More likely, they go because their spouse tells them they must. A different kind of moral hazard is in play in this model!
Many free market theories toward health care like this fall apart in practical application. But the idea has circled around health reform debates for years saying we should let market forces govern health care distribution decisions, not the government or even insurers. Usually as an argument against government-based reform rather than the basis for serious proposals for reforming health care around one’s personal ability to buy services.
I am not going to re-plow that broader intellectual turf in this post now- that is for another day. But it is a useful context for asking a big question about current anti vaccine behavior and the conservative inkling to use the marketplace to govern decision-making for health care.
Like many, I am getting increasingly frustrated by the resistance of millions of Americans to the science or responsibility to others reasons for getting prompt receipt of an exceptionally safe and effective and free vaccine. Not doing so increases the social risk for everyone, and especially those who are compromised.
It is also keeping the virus alive in droves, which provides a breeding ground for new mutations. Thankfully, the vaccine is still effective against the now dominant delta strain, but what if the next strain can beat it? It is time to get serious about dealing with our vaccine crisis.
Back in January, I wrote of our need to be prepared to approach the vaccine distribution question around economic behavior and incentives- since we are politically unlikely to mandate its use. That is, use proof of vaccines as a basis for entry and pricing to various private entertainment or discretionary purchase choices. This is certainly happening now, with the predictable but intellectually dishonest conservative pockets of political opposition to allowing such market choice approaches.
The next front of this debate seems, to me, to be the enormous question of who should pay the cost of expensive health care interventions for those who now get the virus and get seriously ill. By almost all accounts, those who are now hospitalized- and there are a lot again and a growing number- are the unvaccinated; most accounts are well over 90%. In many cases, this hospitalization is exceptionally expensive.
The obvious question is who should pay for this care. Not before, when the virus was a new and largely classic insurable event- unpredictable and catastrophic in impact to those who got very sick. Now, with a highly safe and available and effective prevention tool, it is entirely predictable that your risky choice to go unvaccinated may carry major health and financial consequences.
I guess you can choose to take this risk and suffer the health consequences. But why should my future health insurance rates include this choice of yours in its calculation? Shouldn’t this be a risky behavior that is rated as a premium add in factor for the unvaccinated? Maybe covid care should even be broken out of the health insurance system so that its costs are borne directly by those who actually get sick, not the rest of us?
Of course, the usual exceptions apply for those with medical justifications for foregoing the vaccine, or for young children or others not yet approved for the shot. Beyond them though, it is entirely reasonable to begin the process of sorting out who should pay for the cost of care around the pandemic. It may be your “personal freedom of choice” to not get a vaccine despite the scientific and moral reasons to do so, but if that choice is to be allowed, why do I – or others who have chosen differently- have to pay for it when your choice goes terribly wrong?
Greg Vigdor
President, WHF