Health insurance coverage, income distribution and healthcare quality in local healthcare markets

Damian S. Damianov, José A. Pagán

Research output: Contribution to journalArticlepeer-review

Abstract

We develop a theoretical model of a local healthcare system in which consumers, health insurance companies, and healthcare providers interact with each other in markets for health insurance and healthcare services. When income and health status are heterogeneous, and healthcare quality is associated with fixed costs, the market equilibrium level of healthcare quality will be underprovided. Thus, healthcare reform provisions and proposals to cover the uninsured can be interpreted as an attempt to correct this market failure. We illustrate with a numerical example that if consumers at the local level clearly understand the linkages between health insurance coverage and the quality of local healthcare services, health insurance coverage proposals are more likely to enjoy public support.

Original languageEnglish (US)
Pages (from-to)987-1002
Number of pages16
JournalHealth Economics (United Kingdom)
Volume22
Issue number8
DOIs
StatePublished - Aug 2013

Keywords

  • adverse selection
  • income
  • insurance
  • local market
  • quality

ASJC Scopus subject areas

  • Health Policy

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