We analyze the effect of introducing a minimum mandatory health insurance plan
in a segmented market in which high risks are affiliated to the public insurer and
low risks to the private ones (market segmentation is endogenously obtained
in our model). We assume both types of insurers must provide the basic plan,insurance is compulsory, and there is a minimum premium regulation. When we
compare the equilibriums pre and post introduction of the basic health insurance
plan, we find that an implicit subsidy mechanism operates that gives some
solidarity to the system, even though no explicit risk compensation mechanism
is introduced. For this implicit subsidy mechanism to operate, it is fundamental
that not only the price of the basic plan is regulated but also the quality of the
services included in such plan, and that the regulator is able to guarantee private
insurers do offer the minimum plan to all risks.
Keywords:
Health insurance, minimum basket of services, managed competition
Beteta, E. (2016). Mandatory Basic Health Insurance in Segmented Markets. Estudios De Economía, 36(2), pp. 217–241. Retrieved from https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/40232
