It is indeed a problem with insurance as well where it's more commonly called moral hazard. With insurance traditionally there are a number of mechanisms which

It is indeed a problem with insurance as well where it's more commonly called moral hazard. With insurance traditionally there are a number of mechanisms which can help mitigate this eg copays, deductibles, etc. - and there is (sometimes) a market for pricing of policy premiums and terms. But it's far from perfect, especially in the US (at least as I understand the American system).