How does moral hazard lead to social loss? Consider an individual who loves cheeseburgers but is at risk for a heart attack. Without health insurance:his cost for each cheeseburger includes both the price of the burger and the increased chance of a heart attack With health insurance:the cost of each cheeseburger declines,since the insurer picks up the costs of heart attack care. In this case,social loss takes the form of extra money, labor,time,and effort that others expend on caring for heart attacks caused by cheeseburger overconsumption Bhattacharya,Hyde and Tu-HealthEconomics Bhattacharya, Hyde and Tu – Health Economics How does moral hazard lead to social loss? • Consider an individual who loves cheeseburgers but is at risk for a heart attack. • Without health insurance: his cost for each cheeseburger includes both the price of the burger and the increased chance of a heart attack • With health insurance: the cost of each cheeseburger declines, since the insurer picks up the costs of heart attack care. • In this case, social loss takes the form of extra money, labor, time, and effort that others expend on caring for heart attacks caused by cheeseburger overconsumption