Does health insurance impede trade inhealth care services?
There is limited trade in health services despite big differences in the price of health care across countries. Whether patients travel abroad for health care depends on the coverage of treatments by their health insurance plan. Under existing health insurance contracts, the gains from trade are not fully internalized by the consumer. The result is a strong"local-market bias"in the consumption of health care. A simple modification of existing insurance products can create sufficient incentives for consumers to travel. For just 15 highly tradable, low-risk treatments, the annual savings to the United States would be $1.4 billion even if only one in 10 patients who need these treatments went abroad. Half of these annual savings would accrue to the Medicare program alone. The authors examine how measures by destination countries to improve and credibly signal the quality of health care can enhance the scope for trade.
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- Martin Gaynor & Deborah Haas-Wilson & William B. Vogt, 2000.
"Are Invisible Hands Good Hands? Moral Hazard, Competition, and the Second-Best in Health Care Markets,"
Journal of Political Economy,
University of Chicago Press, vol. 108(5), pages 992-1005, October.
- Martin Gaynor & Deborah Haas-Wilson & William B. Vogt, 1998. "Are Invisible Hands Good Hands? Moral Hazard, Competition, and the Second Best in Health Care Markets," NBER Working Papers 6865, National Bureau of Economic Research, Inc.
- Mattoo, Aaditya, 2001. "Can no competition policy be better than some competition policy?," International Journal of Industrial Organization, Elsevier, vol. 19(1-2), pages 55-77, January.
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