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Health insurance and diversity of treatment: a policy mix perspective

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  • David Bardey

    ()

  • Bruno Jullien

    ()

  • Jean-Marie Lozachmeur

    ()

Abstract

We determine the optimal health policy mix when the average utility of patients in-creases with the supply of drugs available in a therapeutic class. Health risk coverage rely on two instruments, copayment and reference pricing, that affect the supported risk composed by health expenses and diversity of treatment. For a fixed supply of drugs, the reference pricing policy aims at minimizing expenses in which case, the equilibrium price of drugs is independent of the copayment rate. However, with endogenous supply of drugs, diversity of treatment may susbtitute for insurance so that the reference pricing may depart from maximal cost-containement to promote entry. We then analyse the determinents of the optimal policy. While an increase in risk aversion or in the side effect loss increases diversity and decreases the copayment rate, an increase in entry cost both decreases diversity and the copayment rate.

Suggested Citation

  • David Bardey & Bruno Jullien & Jean-Marie Lozachmeur, 2013. "Health insurance and diversity of treatment: a policy mix perspective," DOCUMENTOS CEDE 010549, UNIVERSIDAD DE LOS ANDES-CEDE.
  • Handle: RePEc:col:000089:010549
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    File URL: http://economia.uniandes.edu.co/publicaciones/dcede2013-08.pdf
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    References listed on IDEAS

    as
    1. Marisa Miraldo, 2007. "Reference Pricing Versus Co-Payment in the Pharmaceutical Industry: Firm's Pricing Strategies," Working Papers 027cherp, Centre for Health Economics, University of York.
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    Cited by:

    1. Puig-Junoy, Jaume & López-Valcárcel, Beatriz González, 2014. "Launch prices for new pharmaceuticals in the heavily regulated and subsidized Spanish market, 1995–2007," Health Policy, Elsevier, vol. 116(2), pages 170-181.

    More about this item

    Keywords

    Health Insurance; Drugs´Price Regulation; Diversity of Treatments.;

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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