Health Expenditures : the Moral Hazard Assumption by Pierre- Yves Geoffard The analysis of many proposals to reform the French health insurance system, and in particular those focusing on co-payment schemes, is heavily dependent on delicate empirical measures of the elasticity of demand for health care. This paper offers a critical survey of the empirical literature on the moral hazard assumption, according to which more extensive health insurance coverage would lead to more spending. The paper begins by recalling that the Rand Health Insurance Study, a major study conducted in the United States in the 1970s, unambiguously concluded that the price elasticity of demand for medical care was negative, especially for ambulatory care. The paper then stresses the limitations of more recent studies undertaken on French data - limitations which are either inherent to the data or due to the econometric methods employed. In addition, evaluating the redistributive aspects of co-payments and their impact on access to care would require more accurate measures of cross price-income elasticity. Despite all these uncertainties, the lessons drawn from the existing empirical studies suggest that the current French co-payment scheme (the ticket modérateur system) is very far from being fair and efficient.