Regulating from the Demand Side: Public Health Insurance with Monopolistically Competitive Providers and Optional Spot Sales
We study the implications of extending public-insurance coverage to an existing medical market in Salop’s spatial model of imperfect competition. In this setup a public insurer sets a price to medical providers, which must maintain their reservation pro.t from selling on the spot market directly to consumers. We show that the public insurer can manipulate this reservation profit by setting the coinsurance rate, and that setting the coinsurance rate properly yields the market first best product diversification. The results survive generalizations including moral hazard and incomplete coverage. When adding quality choice to the analysis, a minimum quality standard that is combined with a proper coinsurance rate can still support market efficiency.
|Date of creation:||Apr 2016|
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- Lakdawalla, Darius & Sood, Neeraj, 2013.
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- Bardey, David & Cremer, Helmuth & Lozachmeur, Jean-Marie, 2016. "The design of insurance coverage for medical products under imperfect competition," Journal of Public Economics, Elsevier, vol. 137(C), pages 28-37.
- David Bardey & Helmuth Cremer & Jean-Marie Lozachmeur, 2015. "The design of insurance coverage for medical products under imperfect competition," DOCUMENTOS CEDE 012564, UNIVERSIDAD DE LOS ANDES-CEDE.
- Bardey, David & Cremer, Helmuth & Lozachmeur, Jean-Marie, 2015. "The Design of Insurance Coverage for Medical Products under Imperfect Competition," IZA Discussion Papers 8815, Institute for the Study of Labor (IZA).
- Bardey, David & Cremer, Helmuth & Lozachmeur, Jean-Marie, 2015. "The design of insurance coverage for medical products under imperfect competition," TSE Working Papers 15-553, Toulouse School of Economics (TSE).
- David Bardey & Helmuth Cremer & Jean-Marie Lozachmeur, 2015. "The Design of Insurance Coverage for Medical Products under Imperfect Competition," CESifo Working Paper Series 5235, CESifo Group Munich.
- Steven C. Salop, 1979. "Monopolistic Competition with Outside Goods," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 141-156, Spring.
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- Nell, Martin & Richter, Andreas & Schiller, Jörg, 2009. "When prices hardly matter: Incomplete insurance contracts and markets for repair goods," European Economic Review, Elsevier, vol. 53(3), pages 343-354, April.
- Nell, Martin & Richter, Andreas & Schiller, Jörg, 2005. "When prices hardly matter: Incomplete insurance contracts and markets for repair goods," Working Papers on Risk and Insurance 14, University of Hamburg, Institute for Risk and Insurance.
- Martin Nell & Andreas Richter & Jörg Schiller, 2005. "When prices hardly matter: Incomplete insurance contracts and markets for repair goods," Risk and Insurance 0501002, EconWPA.
- Nell, Martin & Richter, Andreas & Schiller, Jörg, 2006. "When prices hardly matter: Incomplete insurance contracts and markets for repair goods," Discussion Papers in Business Administration 1187, University of Munich, Munich School of Management.
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