Compare the Maxwell and Pauly articles on Moral Hazard - Essay Example

Compare the Maxwell and Pauly articles on Moral Hazard Upon reading the articles of Gladwell and Pauly about moral hazards, the truth about America health care surfaces. At certain point of the story, economic issues are integrated as what Pauly would want to emphasize. On the other hand, Gladwell is much more realistic on this issue, taking into account the truth behind the American health care. Pauly states moral hazard takes place “when the expected loss from an adverse event increases as insurance coverage increases” (Pauly, 2007, p.1). This view of a moral hazard applied in the context of health insurance seems to have strong influence coming from economic perspective.

People buy health insurance to protect themselves from future financial risks. This is the point of Pauly when issue concerning what motivates Americans to buy insurance is taken into consideration. From economic point of view, Pauly has the point and got it right. However, if this would be the case since he also states that “people contemplating about insurance are not poor or high risk” (2), most, if not all, Americans must be insured. From Gladwell’s article, there is a significant contradiction to Pauly’s point since Americans spend $5,267 per capita on health care every year and even a visit to their dentists seems to be a luxury (Gladwell, 2005).

This only depicts the reality that to be insured in the US for health care is a bit expensive for ordinary citizens, which until now many Americans suffered financial bankruptcy due to unpaid amount of bills from received medicare. Gladwell and Pauly would both agree marginal benefits should be tantamount to marginal costs. However, what Pauly fails to consider is the capacity of every Americans to secure health insurance for each of them. The moral hazard that Pauly would want to point out cannot have full realization if in the first place the Americans do not have the capacity to secure health insurance.

In other words, based on Gladwell’s article, the prevailing US health care is not even subject to moral hazard. Pauly’s article might be too presumptuous about the health care system situation in the US by not initiating prior consideration of the minor details just as what Gladwell exactly did. In the first place, consumers could not demand for more health care, as they do not even have one in the first place as what Gladwell would want to clearly state. Personally, I do not want to go the doctor when nothing was wrong with me, even though I might have a very generous policy for my health insurance.

In this case, the moral hazard Pauly is trying to explain cannot basically apply in my case. In addition, unlike Pauly, Gladwell is trying to simplify the issue about moral hazard. Gladwell in general would want to elaborate the fact we, as society want to be able to receive all health care that everyone demands. The truth is that humans need to have more and even take into consideration the associated costs with the health care system. That is why Gladwell unlike Pauly would want to emphasize Americans especially those who find health care expensive fail most of the time to take a visit to their doctors.

ReferencesGladwell, M. (2005). The Moral-Hazard Myth. Retrieved from http://www.newyorker.com/archive/2005/08/29/050829fa_factPauly, M. V. (2007). The Truth about Moral Hazard and Adverse Selection. Retrieved from http://surface.syr.edu/cgi/viewcontent.cgi?article=1006&context=cpr