Health Care Moral Hazards

So, everybody's talking about healthcare reform, but who's THINKING about healthcare reform? I've got some thoughts. But first let's define a term that is relevant to the discussion - moral hazard.

• Moral hazard is the result of eliminating the penalty for not doing the right thing. The risk of this penalty ensures parties in transactions will play by the rules of the free market. Markets require that parties in transactions bear some risk of penalty for failure to uphold their end of the transaction, or else markets eventually stop functioning.

The U.S. health delivery system has gone out of control - it doesn't respond to market forces, and its pricing is driving people out of the system. Several moral hazards have been introduced into the system, creating this condition.

• There is no individual health care cost for poor health maintenance - no penalty for smoking, for being overweight, for not exercising, for participating in injury-prone activities, for skipping routine checkups. This lack of cost to the individual is largely because we pay for routine health care with insurance. People would feel this cost more if they paid (or felt like they paid) for their care out of their own pockets.
  
  
• We haven't decided how to pay to care for many of those who opt out (I know many people can't afford to pay, but bear with this line of reasoning for a moment.) of health care, but we demand they get the most expensive care we offer - emergency care. Our national ethos demands that we do our best to save the dying. Our medical technology has evolved to perform remarkably at this task, but it's expensive to have those skilled professionals, sophisticated equipment, and modern facilities on hand throughout the nation. Preventing people from entering the emergency system should be the goal of our health care strategy, but people go to the emergency room and are treated for routine problems that have been allowed to fester. Just like people who buy a house with no money down and then walk away because housing values drop, people who ignore health care until deathly ill and then go to the emergency room are acting in their own best interest, because of the introduction of a moral hazard - not letting people die for lack of money - that I think speaks positively of our nation's values.
  
  
• The medical industry is an industry. There are best practices, not so good practices, and bad practices. Consumers aren't well informed about medical best practices. We don't know which are the best practices - most of us only deal with the industry a few times a year, and only once or twice in our lives for a big problem - so we can't look for the best practices. This results in another moral hazard - consumers can't punish bad medical industry actors by avoiding them, since consumers can't identify them.

In order to fix our health care system, we must eliminate the moral hazards. I've got more thoughts, but I want to hear from you. Are there any other moral hazards out there?