Moral hazard in health insurance: are consumer-directed plans the answer?

The concept of moral hazard in relation to health insurance is an area that has both haunted and fascinated economists, policy-makers, and payers almost since the first health insurance plans were offered by employers. Through the years since Kenneth Arrow's groundbreaking work in 1963, the health care industry has been looking for the proper level of cost-share for patient insureds that will affect their health care choices. The approach of some newer plan offerings, termed 'consumer-directed' or 'consumer-driven' plans by their promoters, seem to have the potential of affecting moral hazard in health insurance.