What is one effect of moral hazard in the U.S. health care market?

Moral hazard in the context of the U.S. health care market refers to the situation where individuals may take more risks or consume more health care services than they normally would, due to the fact that they are insulated from the full cost of those services. This typically happens after an individual has purchased insurance coverage. When people have insurance, they do not bear the entire financial burden of their health care decisions, which may lead to overconsumption of medical care.

For example, if a person has a health insurance plan with low copays or no deductibles, they might be less hesitant to visit the doctor for minor ailments or seek unnecessary medical tests and treatments, believing they will not have to pay the full cost. This behavior increases demand for health care services, potentially leading to higher overall costs in the health care system, as more services are utilized than are necessary for treating conditions.

The other choices do not accurately characterize the effects of moral hazard. While preventive care might be encouraged for some individuals, it does not specifically capture the essence of moral hazard, which is primarily about overconsumption. Similarly, moral hazard does not typically lead to overall reductions in health care costs or improvements in competition among providers; rather, it can complicate these aspects by encouraging