Insurer pricing and consumer welfare: evidence from Medigap

• 成果类型: Article
• 署名作者: Starc, Amanda
• 署名单位: University of Pennsylvania
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12048
• 发表日期: 2014
• 页码: 198-220
• 关键词: health-insurance; adverse selection; CHOICE; MARKET; cost; industry; QUALITY

摘要

This article examines the welfare impact of imperfect competition in the Medicare supplement insurance (Medigap) market. Two firms control nearly three fourths of the Medigap market, and premiums exceed claims by over 25%. I find that a low price elasticity and consumers' brand preferences lead firms to engage in substantial marketing and price above cost. Therefore, the strategic behavior of insurers facing relatively inelastic demand is critical in explaining poor market performance. I also find that insurers do not capture all of the rents in this market; rents also accrue to actors who perform marketing functions, including agents and brokers.