The Moral-Hazard Myth

Malcolm Gladwell, author of The Tipping Point and Blink, examines the premise underlying U.S. health insurance known by the Dickensian term: Moral Hazard. The theory of Moral Hazard describes the notion that insurance can change peoples’ behavior. Without deductibles, co-payments and other barriers to use, people will use too much health care.

Gladwell provides evidence disputing this. But he is more interested explaining the underlying theory of insurance – risk redistribution. He argues that the rest of the world regards health coverage as something to be equally and widely shared among the entire population. He wonders why the U.S., with two and half times the health care spending of the rest of the industrialized world, remains among the lowest ranking in infant mortality, life expectancy, and immunization. (More Malcolm Gladwell stories.)