Healt care network formation and policyholders'welfare
We develop a model in which two insurers and two health care providers compete for a fixed mass of policyholders. Insurers compete in premium and offer coverage against financial consequences of health risk. They have the possibility to sign agreements with providers to establish a health care network. Providers, partially altruistic, are horizontally differentiated with respect to their physical address. They choose the health care quality and compete in price. First, we show that policyholders are better off under a competition between conventional insurance rather than under a competition between integrated insurers (Managed Care Organizations). Second, we reveal that the competition between a conventional insurer and a Managed Care Organization (MCO) leads to a similar equilibrium than the competition between two MCOs characterized by a different objective i.e. private versus mutual. Third, we point out that the ex ante providers' horizontal differentiation leads to an exclusionary equilibriumin which both insurers select one distinct provider. This result is in sharp contrast with frameworks that introduce the concept of option value to model the (ex post) horizontal differentiation between providers.
|Date of creation:||01 Aug 2010|
|Contact details of provider:|| |
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.:
- Thomas Buchmueller & John DiNardo, 1999.
"Did Community Rating Induce an Adverse Selection Death Spiral? Evidencefrom New York, Pennsylvania and Connecticut,"
NBER Working Papers
6872, National Bureau of Economic Research, Inc.
- Thomas Buchmueller & John Dinardo, 2002. "Did Community Rating Induce an Adverse Selection Death Spiral? Evidence from New York, Pennsylvania, and Connecticut," American Economic Review, American Economic Association, vol. 92(1), pages 280-294, March.
- David Bardey & Jean-Charles Rochet, 2009.
"Competition among health plans: a two-sided market approach,"
DOCUMENTOS DE TRABAJO
005217, UNIVERSIDAD DEL ROSARIO.
- David Bardey & Jean-Charles Rochet, 2010. "Competition Among Health Plans: A Two-Sided Market Approach," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(2), pages 435-451, 06.
- Bijlsma, Michiel & Boone, Jan & Zwart, Gijsbert, 2009.
"Selective contracting and foreclosure in health care markets,"
CEPR Discussion Papers
7576, C.E.P.R. Discussion Papers.
- Michiel Bijlsma & Jan Boone & Gijsbert Zwart, 2010. "Selective contracting and foreclosure in health care markets," CPB Discussion Paper 140, CPB Netherlands Bureau for Economic Policy Analysis.
- Bijlsma, M. & Boone, J. & Zwart, G., 2009. "Selective Contracting and Foreclosure in Health Care Markets," Discussion Paper 2009-89, Tilburg University, Center for Economic Research.
- Andrew M. Jones (ed.), 2006. "The Elgar Companion to Health Economics," Books, Edward Elgar Publishing, number 3572.
- Ching-to Albert Ma & Michael Riordan, 1997.
"Health Insurance, Moral Hazard, and Managed Care,"
0080, Boston University - Industry Studies Programme.
- Capps, Cory & Dranove, David & Satterthwaite, Mark, 2003. " Competition and Market Power in Option Demand Markets," RAND Journal of Economics, The RAND Corporation, vol. 34(4), pages 737-763, Winter.
- Jean-Marc Bourgeon & Pierre Picard & Jérôme Pouyet, 2008.
"Providers'affiliation, insurance and collusion,"
When requesting a correction, please mention this item's handle: RePEc:col:000092:007457. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Facultad de Economía)
If references are entirely missing, you can add them using this form.