Pharmaceutical cost-sharing systems and savings for health care systems from parallel trade
AbstractThis paper analyzes the consequences of parallel trade on health care systems in a two-country model with a vertical distributor relationship. In particular, two cost-sharing systems - coinsurance and indemnity insurance - are compared with respect to changes in copayments and public health expenditure. Under both cost-sharing systems, parallel trade generates a price-decreasing competition effect in the destination country and a price-increasing double marginalization effect in the source country. In the destination country, copayments for patients decrease to a larger extent under indemnity insurance, whereas reductions of public health expenditure occur only under coinsurance. In the source country, copayments increase less under coinsurance, whereas health expenditure is reduced more under indemnity insurance. This illustrates that a harmonization of health care systems would not make sense. --
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Bibliographic InfoPaper provided by University of Goettingen, Department of Economics in its series Center for European, Governance and Economic Development Research Discussion Papers with number 179.
Date of creation: 2013
Date of revision:
cost-sharing; parallel trade; coinsurance rates; indemnity insurance;
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-12-29 (All new papers)
- NEP-HEA-2013-12-29 (Health Economics)
- NEP-INT-2013-12-29 (International Trade)
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