Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/236702 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9160
Publisher: 
Center for Economic Studies and Ifo Institute (CESifo), Munich
Abstract: 
This paper studies a market for a medical product in which there is perfect competition among health insurers, while the good is sold by a monopolist. Individuals differ in their severity of illness and there is ex post moral hazard. We consider two regimes: one in which insurers use coinsurance rates (ad valorem reimbursements) and one in which insurers use copayments (specific reimbursements). We show that the induced equilibrium with copayments involves a lower producer price and a higher level of welfare for consumers. This results provides strong support for a reference price based reimbursement policy.
Subjects: 
ex post moral hazard
health insurance competition
copayments
imperfect competition
JEL: 
I11
I13
I18
Document Type: 
Working Paper
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