UPDATE – Moral hazard and its impacts defined

UPDATE – One of the most thoughtful, well-written, and best pieces on what health insurance is, what it ought to be, and the different philosophies about same was written by Malcolm Gladwell of The New Yorker last year and subsequently posted by Marc Kashinsky.
Matt Holt posted a review/commentary/expansion on the Gladwell piece, once again demonstrating he knows his stuff.
Mr. Gladwell delves into the depths of ‘moral hazard’ and its role in the Bush Administration’s health care policy thinking, as well as its impact on individual decisions about care.
Re the latter, here is one of the more striking passages.
“Sered and Fernandopulle tell the story of Steve, a factory worker from northern Idaho, with a “grotesquelooking left hand–what looks like a bone sticks out the side.” When he was younger, he broke his hand. “The doctor wanted to operate on it,” he recalls. “And because I didn’t have insurance, well, I was like ‘I ain’t gonna have it operated on.’ The doctor said, ‘Well, I can wrap it for you with an Ace bandage.’ I said, ‘Ahh, let’s do that, then.’ ” Steve uses less health care than he would if he had insurance, but that’s not because he has defeated the scourge of moral hazard. It’s because instead of getting a broken bone fixed he put a bandage on it.”
Print it, stick it in your “to be read” file, and absolutely read it.