HEALTH INSURANCE COVERAGE, INCOME DISTRIBUTION AND HEALTHCARE QUALITY IN LOCAL HEALTHCARE MARKETS
Article first published online: 19 OCT 2012
Copyright © 2012 John Wiley & Sons, Ltd.
Volume 22, Issue 8, pages 987–1002, August 2013
How to Cite
Damianov, D. S. and Pagán, J. A. (2013), HEALTH INSURANCE COVERAGE, INCOME DISTRIBUTION AND HEALTHCARE QUALITY IN LOCAL HEALTHCARE MARKETS. Health Econ., 22: 987–1002. doi: 10.1002/hec.2874
- Issue published online: 8 JUL 2013
- Article first published online: 19 OCT 2012
- Manuscript Accepted: 31 AUG 2012
- Manuscript Revised: 27 JUN 2012
- Manuscript Received: 13 OCT 2011
- adverse selection;
- local market
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.