Coinsurance vs. co-payments: Reimbursement rules for a monopolistic medical product with competitive health insurers

Helmuth Cremer and Jean-Marie Lozachmeur

Journal of Health Economics, 2022, vol. 84, issue C

Abstract: This paper studies a market for a medical product in which there is perfect competition among health insurers, while the good is sold by a monopolist. Individuals differ in their severity of illness and there is ex postmoral hazard. We consider two regimes: one in which insurers use coinsurance rates (ad valorem reimbursements) and one in which insurers use co-payments (specific reimbursements). We show that the induced equilibrium with co-payments involves a lower producer price and a higher level of welfare for consumers even though it may imply a larger consumer price. This result provides strong support for a reference price based reimbursement policy.

Keywords: Ex post moral hazard; Health insurance competition; Copayments; Imperfect competition (search for similar items in EconPapers)
JEL-codes: I11 I13 I18 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Coinsurance vs. copayments: reimbursement rules for a monopolistic medical product with competitive health insurers (2022)
Working Paper: Coinsurance vs. Copayments: Reimbursement Rules for a Monopolistic Medical Product with Competitive Health Insurers (2021)
Working Paper: Coinsurance vs. copayments: reimbursement rules for a monopolistic medical product with competitive health insurers (2021)
Working Paper: Coinsurance vs. copayments: reimbursement rules for a monopolistic medical product with competitive health insurers (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:84:y:2022:i:c:s0167629622000613

DOI: 10.1016/j.jhealeco.2022.102642

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