Coinsurance vs. copayments: reimbursement rules for a monopolistic medical product with competitive health insurers

Helmuth Cremer and Jean-Marie Lozachmeur

No 16238, CEPR Discussion Papers from Centre for Economic Policy Research

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 post moral hazard. We consider two regimes: one in which insurers use coinsurance rates (ad valorem reimbursements) and one in which insurers use copayments (specific reimbursements). We show that the induced equilibrium with copayments involves a lower producer price and a higher level of welfare for consumers. This results 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: 2021-06
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Related works:
Journal Article: Coinsurance vs. co-payments: 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 (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)
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