Minimum Coverage Regulation in Insurance Markets
We study the consequences of imposing a minimum coverage in an insurance market where enrollment is mandatory and agents have private information on their true risk type. If the regulation is not too stringent, the equilibrium is separating in which a single firm monopolizes the high risks while the rest attract the low risks, all at positive profits. Hence individuals, regardless of their type, "subsidize" insurers. If the legislation is sufficiently stringent the equilibrium is pooling, all firms just break even and low risks subsidize high risks. None of these results require resorting to non-Nash equilibrium notions.
References listed on IDEAS
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.:
- Daniel McFadden & Carlos Noton & Pau Olivella, .
"Remedies for Sick Insurance,"
620, Barcelona Graduate School of Economics.
- Daniel L. McFadden & Carlos E. Noton & Pau Olivella, 2012. "Remedies for Sick Insurance," NBER Working Papers 17938, National Bureau of Economic Research, Inc.
- Daniel McFadden & Carlos Noton & Pau Olivella, 2013. "Remedies for Sick Insurance," Documentos de Trabajo 302, Centro de Economía Aplicada, Universidad de Chile.
- Mark Pauly, 2012. "Wussinomics: the state of competitive efficiency in private health insurance," International Journal of Health Economics and Management, Springer, vol. 12(3), pages 235-245, September.
- M. Kate Bundorf & Jonathan D. Levin & Neale Mahoney, 2008.
"Pricing and Welfare in Health Plan Choice,"
NBER Working Papers
14153, National Bureau of Economic Research, Inc.
- Vikram Tiwari & H. Heese, 2009. "Specialization and competition in healthcare delivery networks," Health Care Management Science, Springer, vol. 12(3), pages 306-324, September.
- Bertrand Villeneuve, 2003. "Concurrence et antisélection multidimensionnelle en assurance," Annals of Economics and Statistics, GENES, issue 69, pages 119-142.
- Laurie J. Bates & James I. Hilliard & Rexford E. Santerre, 2012. "Do Health Insurers Possess Market Power?," Southern Economic Journal, Southern Economic Association, vol. 78(4), pages 1289-1304, April.
- Neudeck, Werner & Podczeck, Konrad, 1996. "Adverse selection and regulation in health insurance markets," Journal of Health Economics, Elsevier, vol. 15(4), pages 387-408, August.
- Francesco Decarolis, 2015. "Medicare Part D: Are Insurers Gaming the Low Income Subsidy Design?," American Economic Review, American Economic Association, vol. 105(4), pages 1547-80, April.
- Olivella, Pau & Vera-Hernandez, Marcos, 2007. "Competition among differentiated health plans under adverse selection," Journal of Health Economics, Elsevier, vol. 26(2), pages 233-250, March.
- Mahar, Stephen & Bretthauer, Kurt M. & Salzarulo, Peter A., 2011. "Locating specialized service capacity in a multi-hospital network," European Journal of Operational Research, Elsevier, vol. 212(3), pages 596-605, August.
- Michael Smart, 1996.
"Competitive Insurance Markets with Two Unobservables,"
msmart-96-01, University of Toronto, Department of Economics.
- Smart, Michael, 2000. "Competitive Insurance Markets with Two Unobservables," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 153-69, February.
- Pau Olivella & Marcos Vera-Hernandez, 2010. "How complex are the contracts offered by health plans?," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 1(3), pages 305-323, July.
- Finkelstein, Amy, 2004. "Minimum standards, insurance regulation and adverse selection: evidence from the Medigap market," Journal of Public Economics, Elsevier, vol. 88(12), pages 2515-2547, December.
- repec:adr:anecst:y:2003:i:69:p:06 is not listed on IDEAS
- Jack, William, 2006. "Optimal risk adjustment with adverse selection and spatial competition," Journal of Health Economics, Elsevier, vol. 25(5), pages 908-926, September.
- William E. Encinosa & David E. M. Sappington, 1997. "Competition among Health Maintenance Organizations," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(1), pages 129-150, 03.
When requesting a correction, please mention this item's handle: RePEc:edj:ceauch:301. 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: ()
If references are entirely missing, you can add them using this form.