How does a moral hazard undermine the ability of market forces to distribute resources based on public health goals?

In the problem of moral hazard, people get insured against their health risks and then neglect their health issues as people think they are protected. This leads to increased health risks and larger insurance claims for health costs. Insurance companies face losses.

The problem of moral hazard in the health industry leads to the underachievement of public health goals. The increased number of health issues is not matched with the ability to supply health services from the market forces. Hence there is a scarcity of health resources. Due to information asymmetry, the market forces lack the data on which they can act upon to increase their resources. Public health goals are generally high. In such a situation, market forces cannot offer health services to the poor. Only those who are insured get the service. Generally, the poor and low-middle income class people are kept away from these services, hence getting difficult to achieve the targets.