The paranoia and prejudice of the colonists go hand in hand in this story. Much of their paranoia stems from their mistaken prejudice. Are are immediately suspicious of Kit when she first arrives. She jumps into the water to rescue a small girl, and the townspeople immediately assume that she must be a witch, for girls aren't suppoosed to know how to swim. Then, when the fever of the children spreads, the town becomes paranoid that everyone will suffer, and desperately searches for a scapegoat. Hannah Tupper is already an outcast, already considered suspicious because she behaves differently than the others, and so they put her on trial for witchcraft. Because they are also suspicious of Kit, and don't understand her, they are quick to connect Kit to Hannah's crimes.
Speare's tale is a cautionary one. She advises that bias can easily lead to fear, and that fear can leave the door open to paranoia, an extreme emotion that can cause humans to behave irrationally. A open mind is the safest route.