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IMPOSED HEALTH INSURANCE IN MONOPOLISTIC MARKETS: A THEORETICAL ANALYSIS
Author(s) -
“TED” FRECH H. E.,
GINSBURG PAUL B.
Publication year - 1975
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1975.tb01103.x
Subject(s) - monopolistic competition , indemnity , economics , context (archaeology) , inflation (cosmology) , microeconomics , actuarial science , monopoly , paleontology , physics , theoretical physics , biology
The impact of public health insurance on price and output of medical care is analyzed within the context of monopolistic markets for health services. An important result, which is not obtained in competitive markets, is that indemnity benefits cause smaller price increases than service benefits, both directly and indirectly through the effect of benefit structure on the production of information. Various types of price regulation are considered, including limitation to “usual, customary, and prevailing” levels, a frequently used technique. With a simple dynamic model this type of regulation is shown to cause chronic price inflation.