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The presence of insurance in the health care market leads to an over-utilization of health care services resulting in welfare losses to society as a whole. Thus, one could infer that as a result of lower coverage (and more expensive policies), the United States' health care system is more efficient than Canada's.
State whether you agree or disagree with this statement and why.
Some things to think about:
• Is there a welfare loss due to moral hazard, and can this welfare loss be measured?
• What are the authors' main arguments?
• Which side do you find to be more persuasive?
Please ensure that you define moral hazard and the potential welfare loss in your response.
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