Cremer, Helmuth and Lozachmeur, Jean-Marie (2022) Coinsurance vs. copayments: reimbursement rules for a monopolistic medical product with competitive health insurers. Journal of Health Economics, vol. 84 (n° 102642). pp. 1-11.

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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 di§er 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 (speciÖc reimbursements). We show that the induced equilibrium with copayments involves a lower producer price and a higher level of wel- fare for consumers. This results provides strong support for a reference price based reimbursement policy.