insurance insures and ensures

The former is its purposes; the latter is the unintended but natural consequence. Economists call this the "moral hazard problem"-- ironically, that the thing insured against becomes more probable because its occurrence becomes less painful given the insurance. In the realm of public policy, it relates to key current issues like unemployment insurance and bailouts.

Thomas Sowell deals with this in today's C-J...

One of the things that makes it tough to figure out how much has to be charged for insurance is that people behave differently when they are insured from the way they behave when they are not insured....

The same principle applies to government policies. When taxpayer-subsidized government insurance policies protect people against flood damage, more people are willing to live in places where there are greater dangers of flooding. Often these are luxury beach front homes with great views of the ocean. So what if they suffer flood damage once every decade or so, if Uncle Sam is picking up the tab for restoring everything?...

More than 25,000 properties have received government flood insurance payments more than four times....

Although “moral hazard” is an insurance term, it applies to other government policies besides insurance. International studies show that people in countries with more generous and long-lasting unemployment compensation spend less time looking for jobs....

People change their behavior in other ways when the government pays with the taxpayers' money. After welfare became more readily available in the 1960s, unwed motherhood skyrocketed. The country is still paying the price for that — of which the money is the least of it. Children raised by single mothers on welfare have far higher rates of crime, welfare and other social pathology....

We hear a lot of talk about “safety nets” from big-government liberals...But we hear very little about “moral hazard” from big-government liberals....All of this is a large hazard to taxpayers. And it is not very moral.