Equity and efficiency effects of flat premiums
Cristian Pardo () and
Jorge Sabat ()
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Cristian Pardo: Saint Joseph’s University
Jorge Sabat: Universidad Andres Bello
International Journal of Health Economics and Management, 2025, vol. 25, issue 1, No 2, 27-49
Abstract:
Abstract This paper analyzes the impact of flat premiums on equity and efficiency within a regulated market. We examine the consequences of shifting from a risk-adjusted premium model to a flat premium system, particularly focusing on how this shift affects different income groups and market efficiency. Using a combination of theoretical modeling and empirical analysis, we find that flat premiums may lead to increased cross-subsidization among participants, with notable effects on both equity and efficiency. Our results suggest that while flat premiums simplify the regulatory framework, they also introduce trade-offs that policymakers must carefully consider.
Keywords: Household finance; Health reform; Welfare analysis (search for similar items in EconPapers)
JEL-codes: C54 D14 D15 H51 I13 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:kap:ijhcfe:v:25:y:2025:i:1:d:10.1007_s10754-024-09388-x
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DOI: 10.1007/s10754-024-09388-x
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