Unhealthy Insurance Markets: Search Frictions and the Cost and Quality of Health Insurance

نویسندگان

  • Randall D. Cebul
  • Lowell J. Taylor
  • Mark E. Votruba
چکیده

We analyze the role of search frictions in the market for commercial health insurance. Frictions increase the cost of insurance by enabling insurers to set price above marginal cost, and by creating incentives for inefficiently high levels of marketing. Frictions also lead to price dispersion for identical products and, as a consequence, to increases in the rate of insurance turnover. Our empirical analysis indicates that frictions increase prices enough to transfer 13.2% of consumer surplus from employer groups to insurers (approximately $34.4 billion in 1997), and increase employer group turnover by 64% for the average insurance policy. This heightened turnover reduces insurer incentives to invest in the future health of their policy holders. Our analysis also suggests that a publicly-financed insurance option might improve private insurance markets by reducing distortions induced by search frictions.

برای دانلود رایگان متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید

ثبت نام

اگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید

منابع مشابه

Nber Working Paper Series Unhealthy Insurance Markets: Search Frictions and the Cost and Quality of Health Insurance

We analyze the role of search frictions in the market for commercial health insurance. Frictions increase the cost of insurance by enabling insurers to set price above marginal cost, and by creating incentives for inefficiently high levels of marketing. Frictions also lead to price dispersion for identical products and, as a consequence, to increases in the rate of insurance turnover. Our empir...

متن کامل

Unhealthy Insurance Markets: Search Frictions and the Cost and Quality of Health Insurance by

In the United States, health insurance for those under age 65 is typically provided through group plans purchased by employers from commercial insurers. In the health insurance market, insurers provide complex multi-attribute services, and search frictions arise as employers undertake the costly process of finding appropriate health insurance for their workers. These frictions distort market ou...

متن کامل

Essays on Private Medicare Insurance Markets

This dissertation consists of two essays in economics of industrial organization on private Medicare insurance markets. In the first chapter, together with Naoki Aizawa, we study the incentives for private health insurers to use advertising to attract healthy individuals in the market for private Medicare plans called Medicare Advantage (MA). Using data on the advertising expenditures of MA pla...

متن کامل

Determining Health Insurance Attributes and Levels: A qualitative study

Background: Health insurance is one of the financing mechanisms in the health sector that reduces expensive and unforeseen costs of the health care for households and converts these costs into predictable premiums. The purpose of this study was to identify the appropriate attributes and levels using the discrete choice experiments for health insurance, which can describe health care services ap...

متن کامل

The Impact of Health System Reform Plan on the Cost of Inpatient Prescriptions of Health Insurance in Public Hospitals in Sari, Iran

 Background and purpose: In recent years, Health System Reform Plan has been implemented in Iran to improve health care system. Medication costs, including medical prescriptions are major parts of the budget in this project. In the meantime, health insurance plays a significant role in providing these costs. This study aimed at evaluating the effect of Health System Reform Plan on the cost of m...

متن کامل

ذخیره در منابع من


  با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید

عنوان ژورنال:

دوره   شماره 

صفحات  -

تاریخ انتشار 2010