I am putting in a one piece shower insert on the outer wall. It does not go all the way to the ceiling should there be a moisture barrier there like Tar Paper or something

Yes. All exterior walls should be insulated with a moisture barrier. A moisture barrier does not prevent moisture from being transmitted. A moisture barrier prevents condensation from occurring inside the walls by preventing the warmer, humid air masses inside from mixing with the colder air masses from the outside. The normal paper or foiled backed insulation should be sufficient.