Moral Hazard in Health Insurance

Health insurance exists to protect people from unpredictable, potentially catastrophic medical costs by pooling risk across a large population. But once someone is insured, the price they personally face for an extra unit of care is no longer the full cost — it is only their out-of-pocket share, with the pool covering the rest. This simulator lets you drag an insurance plan's out-of-pocket cost-sharing level from high-deductible/high-coinsurance down to near-zero cost-sharing, and watch a simulated population of patients make consumption decisions based on the price they personally face. Total healthcare consumption is decomposed into genuinely beneficial care and marginal, low-value care — the latter growing disproportionately as coverage becomes more generous — alongside a live readout of how well protected the patient is against a catastrophic medical bill, making the core insurance-design tradeoff between protection and overconsumption directly visible.