How complex are the contracts offered by health plans?

Pau Olivella, Marcos Vera-Hernandez

Research output: Contribution to journalArticleResearchpeer-review

2 Citations (Scopus)

Abstract

© The Author(s) 2010. When health plans compete under adverse selection, the competitive equilibrium set of contracts is unique. However, the allocation of these contracts among health plans is undetermined. We show that three health plans suffice to sustain an equilibrium where each health plan offers a single contract and attracts a single type of agent (full specialization). We also show that this equilibrium can be ruled out by introducing any horizontal differentiation, and that if in equilibrium each health plan attracts all types of agents, at least one of the health plans must do so through a menu of contracts.
Original languageEnglish
Pages (from-to)305-323
JournalSERIEs
Volume1
DOIs
Publication statusPublished - 1 Jul 2010

Keywords

  • Adverse selection
  • Differentiation
  • Health plans competition

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