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Ordeals, inequalities, moral hazard and non-monetary incentives in health care

Published online by Cambridge University Press:  28 May 2020

Daniel M. Hausman Open the ORCID record for Daniel M. Hausman [Opens in a new window]
Daniel M. Hausman*
Affiliation:
Department of Philosophy, University of Wisconsin–Madison, 600 N. Park Street, Madison, WI53706, USA
*
Email: dhausman@wisc.edu
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Abstract

This essay begins by summarizing the reasons why unregulated health-care markets are inefficient. The inefficiencies stem from the asymmetries of information among providers, patients and payers, which give rise to moral hazard and adverse selection. Attempts to ameliorate these inefficiencies by means of risk-adjusted insurance and monetary incentives such as co-pays and deductibles lessen the inefficiencies at the cost of increasing inequalities. Another possibility is to rely on non-monetary incentives, including ordeals. While not a magic bullet, these are feasible methods for addressing the inadequacies of market provision of health care, such as moral hazard.

Keywords

ordealsmoral hazardnon-monetary incentivesinequality
Type
Symposium Article
Information
Economics & Philosophy , Volume 37 , Special Issue 1: Special Issue on Ethics of Economic Ordeals , March 2021 , pp. 23 - 36
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Copyright
© The Author(s), 2020. Published by Cambridge University Press

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