Moral Hazard — Must Read in the New Yorker

Malcolm Gladwell, of The Tipping Point and Blink, has a must-read article in the new New Yorker on moral hazard: “the bad idea behind our health care system.” Gladwell has a great talent in turning dry economic theory into compelling controversy — in this case, the bad idea from economics that “moral hazard” (or the tendency of consumers to use more of something low-priced or free) is the driving theory behind our health care system.

Here’s his conclusion:

“The issue about what to do with the health-care system is sometimes presented as a technical argument about the merits of one kind of coverage over another or as an ideological argument about socialized versus private medicine. It is, instead, about a few very simple questions. Do you think that this kind of redistribution of risk is a good idea? Do you think that people whose genes predispose them to depression or cancer, or whose poverty complicates asthma or diabetes, or who get hit by a drunk driver, or who have to keep their mouths closed because their teeth are rotting ought to bear a greater share of the costs of their health care than those of us who are lucky enough to escape such misfortunes? In the rest of the industrialized world, it is assumed that the more equally and widely the burdens of illness are shared, the better off the population as a whole is likely to be. The reason the United States has forty-five million people without coverage is that its health-care policy is in the hands of people who disagree, and who regard health insurance not as the solution but as the problem.”

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