Health Insurance : Moral Hazard And Adverse Selection

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By far the biggest weakness in the health technology debate is that HIT does not address the fundamental issues that leave to expensive health care: moral hazard and adverse selection (Blumenthal, 2006). Moral hazard is the idea that if consumers have generous health insurance, they over utilize health services. This concept—supported by the RAND health insurance experiment—raises the overall price of health care in U.S. Adverse selection is the idea that mainly sick patients purchase insurance and healthy patients forgo purchasing insurance. This not only raises the price of health insurance and limits coverage, it leads to what is called a “death spiral”, a phenomenon that describes an insurance company going out of business due to the sickest, most costly patients staying on insurance plans. Neither moral hazard nor adverse selection are impacted by HIT, which questions how much of an impact health technology will have on the healthcare system. Another flaw in the HIT studies is that there is selection bias. For example, most of these studies have typically been based around the implementation of a form of health technology in only one hospital. It is incredibly difficult to apply the results from studies about a singular hospital or doctor’s office to an entire health system, whether it is nationally or a RHIO. Other studies only focus on academic hospitals, which are typically hospitals that have more staff and funding. These are also teaching hospitals that are used
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