Competition between Health Maintenance Organizations and NonIntegrated Health Insurance Companies in Health Insurance Markets

Baranes, Edmond and Bardey, David (2015) Competition between Health Maintenance Organizations and NonIntegrated Health Insurance Companies in Health Insurance Markets. Health Economics Review, vol. 36 (n° 5).

Full text not available from this repository.
Official URL: http://tse-fr.eu/pub/30565

Abstract

This article examines a model of competition between two types of health insurer: Health Maintenance Organizations (HMOs) and nonintegrated insurers. HMOs vertically integrate health care providers and pay them at a competitive price, while nonintegrated health insurers work as indemnity plans and pay the health care providers freely chosen by policyholders at a wholesale price. Such difference is referred to as an input price effect which, at first glance, favors HMOs. Moreover, we assume that policyholders place a positive value on the provider diversity supplied by their health insurance plan and that this value increases with the probability of disease. Due to the restricted choice of health care providers in HMOs a risk segmentation occurs: policyholders who choose nonintegrated health insurers are characterized by higher risk, which also tends to favor HMOs. Our equilibrium analysis reveals that the equilibrium allocation only depends on the number of HMOs in the case of exclusivity contracts between HMOs and providers. Surprisingly, our model shows that the interplay between risk segmentation and input price effects may generate ambiguous results. More precisely, we reveal that vertical integration in health insurance markets may decrease health insurers’ premiums.

Item Type: Article
Language: English
Date: November 2015
Refereed: Yes
Uncontrolled Keywords: Vertical integration, Health maintenance organizations, Competition policy
JEL codes: I11 - Analysis of Health Care Markets
L42 - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 21 Jul 2016 11:58
Last Modified: 24 Jan 2019 00:13
OAI ID: oai:tse-fr.eu:30565
URI: http://publications.ut-capitole.fr/id/eprint/22238

Actions (login required)

View Item View Item