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HEALTH INSURANCE COVERAGE, INCOME DISTRIBUTION AND HEALTHCARE QUALITY IN LOCAL HEALTHCARE MARKETS
Author(s) -
Damianov Damian S.,
Pagán José A.
Publication year - 2013
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.2874
Subject(s) - health care , business , quality (philosophy) , health insurance , actuarial science , self insurance , cover (algebra) , public health insurance , public economics , economics , economic growth , mechanical engineering , engineering , philosophy , epistemology
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. Copyright © 2012 John Wiley & Sons, Ltd.