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Moral hazard is a concept that is central to risk and insurance management. It refers to change in economic behavior when individuals are protected or insured against certain risks and losses whose costs are borne by another party. It asserts that the presence of an insurance contract increases the probability of a claim and the size of a claim. Through the US Affordable Care Act (ACA) of 2010, this study seeks to examine the validity and relevance of moral hazard in health care reform and determine how welfare losses or inefficiencies could be mitigated.

This study is divided into three sections. The first contrasts conventional moral hazard from an emerging or alternative theory. The second analyzes moral hazard in terms of the evolution, organization, management, and marketing of health insurance in the USA. The third explains why and how salient reform measures under the ACA might induce health care consumption and production in ways that could either promote or restrict personal health and safety as well as social welfare maximization.

Insurance generally induces health care (over) consumption. However, not every additional consumption, with or without adverse selection, can be considered wasteful or risky, even if it might cost insurers more in the short run. Moral hazard can generate welfare and equity gains. These gains might vary depending on which ACA provisions, insured population, covered illnesses, treatments, and services, as well as health outcomes are taken into account, and because of the relative ambiguities surrounding definitions of “health.” Actuarial risk models can nonetheless benefit from incorporating welfare and equity gains into their basic assumptions and estimations.

This is the first study which examines the ACA in the context of the new or alternative theory of moral hazard. It suggests that containing inefficient moral hazard, and encouraging its desirable counterpart, are prime challenges in any health care reform initiative, especially as it adapts to the changing demographic and socio-economic characteristics of the insured population and regulatory landscape of health insurance in the USA.

Purpose – To assess the claim of moral hazard proponents that individuals insulated from paying for the health care they use tend to demand more, often unnecessary, services, or engage in unhealthier behaviors than they otherwise would, collectively driving up demand and increasing health care spending (HCS).

Methodology/Approach – To test the hypothesis that moral hazard increases rather than decreases HCS, I apply a multivariate analysis to examine data from 21 OECD countries over a 20-year period, using out-of-pocket spending (OPS) as a proxy for moral hazard and as the key variable predicting HCS, controlling for other potential drivers of spending.

Findings – OPS is independently associated with HCS, yet in the direction opposite to what moral hazard theory predicts – about $13 higher HCS per additional $10 OPS (p = 0.000).

Research limitations – As with other cross-national studies, limitations include (1) inability to assess differences in health care delivery and quality within and across countries; (2) differences in the measurement and availability of variables across countries; (3) lack of access to data of potential significance, and (4) hard to evaluate cross-national political and cultural differences with implications for health policy.

Policy implications – At least in the United States, unless a fully publicly financed system to cover medically necessary services is implemented, the policy goals of extending adequate health insurance to a national population and controlling HCS nationally will not be met.

Originality/Value of Paper – Most research on moral hazard in US health care has drawn from comparisons within rather than among national health systems. Therefore, the originality and value of this cross-national study lies in its ability to identify variables that could not be included in single nation studies and which have the ability to inform policy and political action.

The purpose of this paper is to analyse the way in which the factors influencing a transformation towards or away from modularity, according to general modular systems theory, appear in the context of health services, and the extent to which the special characteristics of health services might support or prevent its application.

The arguments constructed in the study are based on the theme of modularity, reflected against the special characteristics of health services identified in the context of health economics.

The results include 11 proposition pairs that direct health services both towards and away from modularity.

Health services are highly heterogeneous in nature and the authors illustrate this with a wide range of examples from elderly care as the authors discuss the application of modularity in this context. Nevertheless, the authors recognise that modularity might suit some health services better than others. The findings provide potentially important information to health service managers and providers, enabling them to understand how modularity would benefit health service provision and where contradictions are to be expected.

This study contributes to the discourse on service modularity in general, and complements the literature on modularity with reference to both public and private health services.

The purpose of this paper is to investigate first, the consumer buying behaviour and claims pattern of medical and health insurance (MHI)/medical and health takaful (MHT) policies and second, to determine whether moral hazard exists among policyholders at the time of application for the product and during claiming for compensation.

The study was conducted on respondents from the insurance industry in Malaysia.

It was found that most claims were rejected due to the discovery of some irregularities by the managed care organizations (MCO) while the Islamic insurer's claims experience, was otherwise. During the buying behaviour stage of MHT, there are fewer tendencies to withhold information but during the claiming stage, due to the generous level of compensation and their awareness of the coverage available naturally influence them to submit excessive claims. To a certain extent moral hazard is present when claims are made for longer disability durations than necessary, and having high average claims per person even for shorter duration disabilities.

The paper concentrates only on the MHI/MHT in Malaysia.

The results provide insights on how the Malaysian insurance industry and other organizations of a similar structure could improve on their business performance.

This paper is perhaps one of the first to address adverse selection and its consequences on MHI/MHT in Malaysia.

The purpose of this paper is to explore challenges to the performance and sustainability of mutual health organisations (MHOs) and health institutions towards enhancing access to quality health care (HC) in Ghana.

Data were gathered through interviews and documentary review.

Problems with late release of reimbursement funds for discharging with claims by the central government has impacted heavily on the financial and strategic management and decision-making processes of the MHOs and health institutions.

The lack of in-depth analysis of the financial viability of the MHOs; and the limited number of schemes selected.

Recommends the need to ensure prompt release of reimbursement funds by government to enable the MHOs to reimburse claims to health institutions.

There is a perceived tension between the MHOs and HC institutions due to late release of reimbursement funds by the government.

Contributes to understanding of how the NHI Act influences the operations of MHOs and health institutions towards increasing access to quality HC and financing.

The purpose of this paper is to test for the existence of residual moral hazard in the three largest US reinsurance markets over the period 1995‐2000 and examine the effectiveness of retention limit, experience rating and long‐term contracting relationship in controlling for moral hazard.

This paper focuses on one peculiar feature in the insurance industry, group affiliation, and tests the presence of residual moral hazard in reinsurance markets. This approach may enable moral hazard to be separated from adverse selection. Moreover, two different econometric methods are employed for the empirical tests: the non‐parametric matching estimators method and the parametric fixed effects model, which may enhance the robustness of the results.

The author finds that, over the period 1995‐2000, residual moral hazard does not exist in the private passenger auto liability and product liability reinsurance markets, but might exist in the homeowners reinsurance market. This finding suggests that the US reinsurance markets are efficient overall and moral hazard is not a serious issue over this period of time. In addition, the author finds that retention limit is effectively used by reinsurers to mitigate the moral hazard problem, whereas experience rating and long‐term contracting relationship are either not used or not effective in controlling the loss experience of reinsurance.

US reinsurance markets are efficient overall and moral hazard is not a serious issue.

The significance of this paper is multifaceted. First, it investigates moral hazard in reinsurance markets by examining internal and external reinsurance jointly. Second, instead of directly examining the correlation between risk and coverage, this paper tests for the presence of residual moral hazard in reinsurance markets. Moreover, the author employs two different econometric methods: the non‐parametric matching estimators method and the parametric fixed effects model, which may enhance the robustness of the results. Third, the use of panel data makes it possible to explore the roles of retention limit, experience rating and long‐term contracting relationship in mitigating the moral hazard problem.

Hospital and health system managers are facing several problems following the introduction of Ghana's national health insurance policy. This study aims to investigate the opinions of health managers about the problems emanating from the national health insurance policy for hospital managers in regard to reimbursement, claims management, service delivery and waiting time.

The study involved key informants from 12 National Health Insurance Scheme (NHIS) accredited district hospitals, which were purposively selected from five regions in Ghana. Data were collected using in‐depth personal interviews with managers of pharmacy, supply/procurement, accounts and insurance scheme units of the hospitals. Data analysis was guided by the major themes that emerged during the interviews. A framework approach to analysis was used, grouping and incorporating themes and sub‐themes that emerged from the interview data.

The major findings identified by interviewees with regards to problems confronting hospital management were: cash flow delays from the health insurance authority; lack of capacity to procure essential drug and non‐drug consumables; and the inability to take initiatives and carry on effective administrative work. Other problems identified by the interviewee included inadequate logistics and human resources, limited space within the hospitals to cope with the increasing number of service users and “moral hazard” on the part of policy holders.

The NHIS has brought many organizational and service management challenges to hospitals. To overcome these challenges, services under the health insurance authority need to be streamlined to remove cash flow bottlenecks. Also, accredited hospitals need to adopt and use new technology, especially computerization and automation of the health insurance service delivery system. This would enable the authority to cope with the huge management problems confronting hospitals and the national insurance scheme. Above all, appropriate fund management systems would have to be established in the hospitals to reduce moral hazards.

Purpose – To examine the effects of health insurance types on the use of prescribed medication that treat patients with hypertension, diabetes, and asthma. The study distinguishes between individuals with private health maintenance organization (HMO) plans and private non-HMO plans. The study also distinguishes between people with health insurance and drug coverage and people with health insurance and no drug coverage.

Methods – Joint discrete factor models are estimated to control for endogeneity of each type of coverage.

Findings – The main findings suggest that the effect of health insurance varies across patients with different conditions. The strongest and most significant effect is evident among patients with hypertension while the weakest and least significant is among patients with asthma. These findings suggest that patients with asymptomatic conditions are more likely to exhibit moral hazard than patients with conditions that impose immediate impairment. Additional results suggest that, relative to the uninsured and people with health insurance but no drug coverage, patients with drug coverage are more likely to initiate drug therapy and to consume more medications.

Originality – The results of the study indicate that moral hazard of drug utilization is condition specific. The variation in “silence” of conditions’ symptoms could be a key reason for difference in insurance effects among patients with hypertension, diabetes, and asthma.

In this paper the aim is to explore what modes of governance, brief alcohol interventions in natal care, such as screening and motivational interviewing (MI) represent, and what social consequences this mode of governance might lead to. Traditionally the Nordic public health research on alcohol control policies gives priority to general control measures aimed at the population. However, the paper seeks to argue the relevance of a governmentality perspective to analyze the mode of governance in brief alcohol interventions which aims at individual level of control.

The empirical base of the paper rests on the contents of a brief intervention educational program aimed at midwifes and medical doctors in natal care in Norway. In light of the governmentality perspective the author analyzes screening and MI used in natal care as a mode of governance which fosters the process of responsibilization and the creation of the “irresponsible other”.

It is argued that brief alcohol intervention in natal care is a perfect example of a neoliberal mode of governance, because it is an indirect way of governance, which casts healthcare workers as a part of the state that wants to make pregnant woman self‐governing and responsible. Further this neoliberal mode of governance might lead to four different social consequences: blurring the line between the power of the state and the power of the self, which blurs the distinction between objective health hazards and moral judgment; spreading of powerful therapeutic‐tools to non‐therapeutic professions further neutralizes the moral dimensions; individualization of responsibilities for fetal health decontextualizes females' drinking habits; and drawing the attention of the healthcare worker towards regulations of normality and away from helping females with severe drinking problems.

Traditionally the Nordic public health research on alcohol control policies gives priority to general control measures aimed at the population. However, this paper shows the relevance of a governmentality perspective to analyze the mode of governance inherent in brief alcohol interventions which aims at an individual level of control. Alongside the general control measures in Norwegian alcohol policies, the state engages women at an individual level, through brief and early interventions. Hence the state has double targets of governance; first the general risk‐avoidance regulations directed at the population, and then the state also facilitating the targeting of individuals.