ON THE EXISTENCE OF RELATIVE MORAL HAZARD by

This paper points out that for purposes of estimating the total cost of various health care bills providing comprehensive prepaid care the relevant concept is not "moral hazard " as usually defined, but rather relative moral hazard, the tendency for an individual to increase utilization over what they might have done under a fee-for-service plus coinsurance system. Although the empirical results are tentative and preliminary, they seem to indicate that great per capita jumps in the consumption of free inpatient care may well have been exaggerated. Prepared by