The Affordable Care Act: Moral Hazard, Adverse Selection, Challenges, Alternative Proposals, and Amendments in Health Insurance Law

Authors

Paige Ross, University of Nebraska College of Law

Date of this Version

12-20-2022

Document Type

Article

Citation

Nebraska Law Bulletin (December 20, 2022)

Comments

Copyright 2022, the author

Abstract

A major issue to address with health insurance in any context, including the ACA, is that of moral hazard. Moral hazard refers to the tendency of any insured party to exercise less care to avoid an insured loss than would be exercised if the loss were not insured. It can result from the policyholders having better information about their actual care levels after coverage is purchased. Additionally, moral hazard requires that the insurer cannot perfectly monitor the policyholder’s level of care after the purchase of insurance. Moral hazard is more likely to occur if a behavior does not involve a policyholder’s own risk.