The Impact of a Public Option in the Health Insurance Market

Andrei Barbos and Yi Deng

MPRA Paper from University Library of Munich, Germany

Abstract: We develop a game-theoretical model to examine the implications of the introduction of a non-profit "public option" in the U.S. health insurance market, in which a continuum of heterogeneous consumers, each facing unknown medical expenditures and differing in their expectations of such expenditures, have to choose between a profit-maximizing private insurance plan and a social-welfare-maximizing public plan. We then estimate and calibrate the model based on the U.S. data and quantify the Nash equilibrium of the market structure. Empirical results suggest that private insurer will still represent a significant part of the insurance market and generate a substantially positive profit.

Keywords: Public Option; Health Insurance Markets (search for similar items in EconPapers)
JEL-codes: I11 L10 L21 L32 (search for similar items in EconPapers)
Date: 2012-06-15
New Economics Papers: this item is included in nep-hea, nep-ias and nep-mkt
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Related works:
Journal Article: THE IMPACT OF A PUBLIC OPTION IN THE U.S. HEALTH INSURANCE MARKET (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:40849

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