An individual with no deductible on his or her health insurance policy will tend to engage in a lifestyle that is less healthy than a person with a $2,000 insurance deductible. This is said to be a problem of

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This situation is an example of moral hazard. Moral hazard occurs when people have insurance coverage that reduces their personal financial liability for healthcare costs, leading them to use more healthcare services than they would otherwise. In this case, the individual with no deductible has no financial incentive to engage in healthy behavior since they will not face any out-of-pocket costs for healthcare regardless of their lifestyle choices. On the other hand, the person with a $2,000 deductible is responsible for a portion of their healthcare costs and may be more likely to engage in healthy behavior to avoid expensive medical bills.

An Individual with No Deductible on His or Her Health