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Forget moral hazard; let’s achieve health care justice for all

December 24, 2019

Topics: Quote of the Day

By Thomas C. Buchmueller, Helen G. Levy, Robert G. Valletta
National Bureau of Economic Research, December 2019


We examine how a key provision of the Affordable Care Act–the expansion of Medicaid eligibility–affected health insurance coverage, access to care, and labor market transitions of unemployed workers. Comparing trends in states that implemented the Medicaid expansion to those that did not, we find that the ACA Medicaid expansion substantially increased insurance coverage and improved access to health care among unemployed workers. We then test whether this strengthening of the safety net affected transitions from unemployment to employment or out of the labor force. We find no meaningful statistical evidence in support of moral hazard effects that reduce job finding or labor force attachment.



By Don McCanne, M.D.

It seems that a positive bit of news, however seemingly mundane, would be appropriate for the Holiday Season.

One argument often made by opponents of health financing reform is that insurance function creates moral hazard – individuals are willing to accept greater risks when other parties bear the costs.

One example is that low-income individuals who receive health care coverage under Medicaid supposedly are less compelled to seek or maintain gainful employment. This study shows that the strengthening of the Medicaid safety net under the Affordable Care Act in states that implemented Medicaid expansion did not produce moral hazard effects that reduce job finding or labor force attachment.

A lesson here is that it is a mistake to advance policy solutions strictly designed to avoid moral hazard when the task at hand should be to ensure that everyone has affordable access to essential health care services.

It would be nice if we could return from the Holidays in a spirit where we are ready to all work together to achieve such a goal. Even Scrooge could be swayed.

Stay informed! Visit www.pnhp.org/qotd to sign up for daily email updates.

About the Commentator, Don McCanne

Don McCanne is a retired family practitioner who dedicated the 2nd phase of his career to speaking and writing extensively on single payer and related issues. He served as Physicians for a National Health Program president in 2002 and 2003, then as Senior Health Policy Fellow. For two decades, Don wrote "Quote of the Day", a daily health policy update which inspired HJM.

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