Healt care network formation and policyholders'welfare

David Bardey and Jean-Marc Bourgeon

No 7457, Documentos de Trabajo from Universidad del Rosario

Abstract: We develop a model in which two insurers and two health care providers compete for a fixed mass of policyholders. Insurers compete in premium and offer coverage against financial consequences of health risk. They have the possibility to sign agreements with providers to establish a health care network. Providers, partially altruistic, are horizontally differentiated with respect to their physical address. They choose the health care quality and compete in price. First, we show that policyholders are better off under a competition between conventional insurance rather than under a competition between integrated insurers (Managed Care Organizations). Second, we reveal that the competition between a conventional insurer and a Managed Care Organization (MCO) leads to a similar equilibrium than the competition between two MCOs characterized by a different objective i.e. private versus mutual. Third, we point out that the ex ante providers' horizontal differentiation leads to an exclusionary equilibriumin which both insurers select one distinct provider. This result is in sharp contrast with frameworks that introduce the concept of option value to model the (ex post) horizontal differentiation between providers.

Keywords: Health Care Network; Horizontal Differentiation; HealthCare Quality (search for similar items in EconPapers)
Pages: 21
Date: 2010-08-01
New Economics Papers: this item is included in nep-ias and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://repository.urosario.edu.co/bitstream/handle/10336/11120/7457.pdf

Related works:
Journal Article: Health Care Network Formation and Policyholders' Welfare (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:col:000092:007457

Access Statistics for this paper

More papers in Documentos de Trabajo from Universidad del Rosario Contact information at EDIRC.
Bibliographic data for series maintained by Facultad de Economía ().