As we've explained in previous episodes, insurance is complicated. Even John gets confused (watch the video!). But there's a reason we have all these deductibles, co-pays, and co-insurance. It's because of the moral hazard, and a very important research study known as the RAND Health Insurance Experiment. Watch this episode and learn all about it.
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Here's more info on the RAND HIE: http://theincidentaleconomist.com/wordpress/the-moral-hazard/
John Green -- Executive Producer
Stan Muller -- Director, Producer
Aaron Carroll -- Writer
Mark Olsen - Graphics
Video Rating: 4 / 5
I cringed when you said “it’s just a theory.” Theories in science are the
highest form ideas can take, they explain why something happens, they have
been justified by many tests.
so the question comes down to… are the lives of poor people worth a few
bucks in overall healthcare costs.
and this debate isn’t over?
ARRGH, ” The Moral Hazard” is not a theory, it is an hypothesis. You, a
Doctor (I presume), just conflated the everyday use of “theory” with its
scientific meaning, and your words, “its just a theory” means what? So, the
“Germ Theory of Disease” is the equivalent of the “Humors Theory of
Disease”. You are doing a disservice to your wonderful informative videos
with this slight.
That study sounds very immoral. Give free healthcare to some people make
others pay the full amount.
Mark Smith says
Missing one thing- insurance companies are appalling bad at managing costs-
an average American hospital bill has a ridiculous number of BS charges
added on and they also work there prices to fit the insurance payout not
their costs. Health insurance companies don’t care about costs- its your
money not theirs and tend to follow a policies not designed for medical
efficacy but according their accountants and executives very tiny brains-
which is why they like medicines for psychiatric care over more effective
alternatives. The pricing mess is just the way they like to put their poor
management on to consumers.
Ike Evans says
5:38…. “They died more…”
…and here I thought death was just a one time thing. It turns out, if
you are poor, that… errrrr… must not be the case.
Matthew Kiefer says
“this is why we have deductible co-pays and co-insurance”
And here I thought it had nothing to do with science and everything to do
with my insurance company being a money grubbing whore that wants to milk
it’s customer base for every dime they can.
Its the RAND corporation these are the guys that came up with mutually
assured destruction theory.
and employed that nut-job who were likely suffer some form of paranoia John
F.ucking Nash , I mean the guy thinks that his co-workers were KGB agents
because they are wearing red ties.
Did anything good came from the RAND tink tank?
no wonder some people became anti-science and anti intellectuals
Moral hazard is not just about the amount of health care consumed, and the
amounts of health care used. Cost sharing also encourages people to seek
better values in health care, to obtain necessary care at lower prices than
if one doesn’t share costs (and the costs can vary widely for the exact
same test, procedure, or treatment). The problem is this information is
not easily available to people, and THAT is where requirements and
regulations can help.
Darakou Hasegawa says
Is this RAND organization related to a certain lady novelist by any chance?
So basically, if you remove insurance then healthy people spend less and
ill people die more.
I guess finding useful, reliable inaimrftoon on the internet isn’t hopeless after all.
All healthcare should be free, a society that refuses to take care of its
members doesn’t deserve to survive.
Ben Miller says
Appendectomy? Yeah, probably, but only because I specifically WANT to get
rid of mine. If I ever live far away from other people, which I’ve often
considered, its much safer to not have one.
Jean-Eider Pierre-Louis says
All I know is, I have schizophrenia. I went to an emergency room back in
december of ’13 and I said IU didn’t have health insurance. They looked at
me like I was crazy. Granted I am, but I have the money to pay for my
healthcare. Anybody got answers to my problem?
Moral hazard doesn’t necessarily refer to the quantity of the items
demanded. In the case of healthcare, the point is that if there is the
option between a $50 drug and a $500 drug, there is no point in choosing
the $50 one. E.g. hospitals charge exorbitant rates for things like
toiletries because the consumers don’t feel the cost.
I’ll always hate the English language for making the word hypothesis an
alternative definition and synonym for theory. I really hope that this
aberration of vocabulary doesn’t exist in other languages. I mean really,
who in their right minds would muddle the distinction between those words?
Matt L says
At first I was surprised that John hadn’t heard of co-insurance. Then I
remembered he used to believe that a minute had 100 seconds.
Kenji Wardenclyffe says
Australia is currently in a situation where the prime minister wants to
introduce a similar system. A co payment on gp visits, tests, procedures,
and medications – basically turning Australia’s medical system into a
version of the American system.
Holly Taylor says
In England having the NHS means people don’t consider whether it’s totally
‘necessary’ before going to see the doctor about any symptoms. Could anyone
from america explain the sort of healthcare they would consider
Poor health is bad for overall healthcare spending though. Preventative
care costs a lot less than emergency care. Like a LOT less.
And no country spends more on it’s healthcare than the U.S. despite most
having similar or even better results and more coverage.
Adam J says
I’m kind of upset you just used the words “just a theory” as in to say that
because something has the term “theory” attached to it it is somehow not
… just sayin’
Blinky Lass says
I find it sickening that this is even a serious argument in the healthcare
debate in the US. This argument is literally for gambling with people’s
lives in order to save costs. Of course it works, because on average,
people are more likely to be healthy than not, but it’s a disgustingly
It’s akin to saying, “Why wear hard hats in a construction site? It’s
unnecessary for most people most of the time. People who wear hard hats
become more reckless and cause more accidents. Plus, you can save on the
costs of hard hats!” Probably trivially true, but is it worth causing more
accidents to be fatal?
Instead, this logic should be applied to government-subsidized banks and
corporations that are run recklessly and incompetently because they will be
bailed out on account of being “too big to fail”. That is the kind of place
where the moral hazard argument should be used, not when human lives are at
Joe Lima says
“Higher deductibles … may be good for health care spending but may be bad
for people’s health.”
Yes, now our high health care costs are bad so if the higher deductibles
and so forth drive health care costs down wouldn’t that be good for
people’s health? Remember the issue is not driving health care costs down
just for the heck of it, it’s driving them down so that poorer people can
Another good analysis of a complicated issue. There’s too much black and
white when many people view current healthcare issues and it ends up
excluding important factors. We need to look at everything and make the
best choices to move forward.