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The Expansionary and Contractionary Supply-Side Effects of Health Insurance

Author

Listed:
  • Eilidh Geddes
  • Molly Schnell

Abstract

We examine how health insurance expansions influence the entry and location decisions of health care providers. While it is generally expected that reductions in consumer prices following insurance expansions will prompt supply-side growth to meet increased demand (Arrow, 1963), we demonstrate both theoretically and empirically that expansions of insurance with low, regulated provider reimbursements (e.g., Medicaid) can instead lead the supply side to contract. Additionally, we show that expansions of insurance with high, market-based prices (e.g., private coverage) can reduce acceptance of public coverage even as they drive growth in the overall concentration of providers.

Suggested Citation

  • Eilidh Geddes & Molly Schnell, 2023. "The Expansionary and Contractionary Supply-Side Effects of Health Insurance," NBER Working Papers 31483, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31483
    Note: EH IO PE
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    Cited by:

    1. Martin B. Hackmann & Jörg Heining & Roman Klimke & Maria Polyakova & Holger Seibert, 2025. "Health Insurance as Economic Stimulus? Evidence from Long-Term Care Jobs," NBER Working Papers 33429, National Bureau of Economic Research, Inc.
    2. Martin Hackmann & Jörg Heining & Roman Klimke & Maria Polyakova & Holger Seibert & Maria A. Polyakova, 2025. "Health Insurance as Economic Stimulus? Evidence from Long-Term Care Jobs," CESifo Working Paper Series 11665, CESifo.

    More about this item

    JEL classification:

    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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