How does the concept of "moral hazard" apply to health care?

Moral hazard in health care specifically refers to the phenomenon where individuals with health insurance may engage in riskier behavior or utilize more health services than they would if they were paying out of pocket. This occurs because the financial burden of these services is partially or wholly covered by the insurance provider, leading to a potential overconsumption of healthcare services.

When individuals have insurance, the direct costs of accessing health care diminish, which may encourage them to seek out more care than necessary, leading to increased demand for health services. This behavior can drive up overall health care costs and utilization rates, impacting the economy and the healthcare system.

In contrast, the other options do not accurately reflect the essence of moral hazard in health care. The notion that it only impacts uninsured individuals is misleading, as moral hazard is primarily associated with those who have insurance. Financial fraud in health care is a separate issue related to dishonest practices rather than the usage of services due to insurance coverage. Lastly, a lack of funding for health services does not align with the concept of moral hazard, as it doesn't pertain to the behaviors induced by having insurance.