The Impact of a Public Option in the Health Insurance Market
AbstractWe develop a game-theoretical model to examine the implications of the introduction of a non-profit "public option" in the U.S. health insurance market, in which a continuum of heterogeneous consumers, each facing unknown medical expenditures and differing in their expectations of such expenditures, have to choose between a profit-maximizing private insurance plan and a social-welfare-maximizing public plan. We then estimate and calibrate the model based on the U.S. data and quantify the Nash equilibrium of the market structure. Empirical results suggest that private insurer will still represent a significant part of the insurance market and generate a substantially positive profit.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 40849.
Date of creation: 15 Jun 2012
Date of revision:
Public Option; Health Insurance Markets;
Other versions of this item:
- Andrei Barbos & Yi Deng, 2013. "The Impact of a Public Option in the Health Insurance Market," Working Papers 0813, University of South Florida, Department of Economics.
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
- L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-03 (All new papers)
- NEP-HEA-2012-09-03 (Health Economics)
- NEP-IAS-2012-09-03 (Insurance Economics)
- NEP-MKT-2012-09-03 (Marketing)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jeffrey R. Brown & Amy Finkelstein, 2008.
"The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market,"
American Economic Review,
American Economic Association, vol. 98(3), pages 1083-1102, June.
- Jeffrey R. Brown & Amy Finkelstein, 2004. "The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market," NBER Working Papers 10989, National Bureau of Economic Research, Inc.
- Rask, Kevin N. & Rask, Kimberly J., 2000. "Public insurance substituting for private insurance: new evidence regarding public hospitals, uncompensated care funds, and medicaid," Journal of Health Economics, Elsevier, vol. 19(1), pages 1-31, January.
- Gruber, Jonathan & Simon, Kosali, 2008. "Crowd-out 10 years later: Have recent public insurance expansions crowded out private health insurance?," Journal of Health Economics, Elsevier, vol. 27(2), pages 201-217, March.
- Leemore S. Dafny, 2010. "Are Health Insurance Markets Competitive?," American Economic Review, American Economic Association, vol. 100(4), pages 1399-1431, September.
- Anirban Basu & Willard G. Manning & John Mullahy, 2004. "Comparing alternative models: log vs Cox proportional hazard?," Health Economics, John Wiley & Sons, Ltd., vol. 13(8), pages 749-765.
- David M. Cutler & Jonathan Gruber, 1995.
"Does Public Insurance Crowd Out Private Insurance?,"
NBER Working Papers
5082, National Bureau of Economic Research, Inc.
- Cutler, David M & Gruber, Jonathan, 1996. "Does Public Insurance Crowd Out Private Insurance?," The Quarterly Journal of Economics, MIT Press, vol. 111(2), pages 391-430, May.
- Ham, John C. & Shore-Sheppard, Lara, 2005.
"The effect of Medicaid expansions for low-income children on Medicaid participation and private insurance coverage: evidence from the SIPP,"
Journal of Public Economics,
Elsevier, vol. 89(1), pages 57-83, January.
- Lara D. Shore-Sheppard & John C. Ham, 2003. "The Effect of Medicaid Expansions for Low-Income Children on Medicaid Participation and Private Insurance Coverage : Evidence from the SIPP," Department of Economics Working Papers 2003-10, Department of Economics, Williams College.
- Lo Sasso, Anthony T. & Buchmueller, Thomas C., 2004.
"The effect of the state children's health insurance program on health insurance coverage,"
Journal of Health Economics,
Elsevier, vol. 23(5), pages 1059-1082, September.
- Anthony T. LoSasso & Thomas C. Buchmueller, 2002. "The Effect of the State Children's Health Insurance Program on Health Insurance Coverage," NBER Working Papers 9405, National Bureau of Economic Research, Inc.
- Krawczyk, Jacek & Zuccollo, James, 2006. "NIRA-3: An improved MATLAB package for finding Nash equilibria in infinite games," MPRA Paper 1119, University Library of Munich, Germany.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Would a public option drive private health insurance out?
by Economic Logician in Economic Logic on 2012-09-12 14:41:00
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.