Quality Competition , Insurance , and Consumer Choice in Health Care Markets

  title={Quality Competition , Insurance , and Consumer Choice in Health Care Markets},
  author={P. A. T Homas and P. Lalitha and YON},
In this model, insurance offering a choice of hospitals is valued because consumers are uncertain which hospital they will prefer ex post. A competitive insurance market facilitates tacit price collusion between hospitals; high margins induce hospitals to compete for customers through overinvestment in quality. Incentives may exist to lock in market share via managed-care plans with less choice and lower prices. As technology becomes more expensive, the market increasingly offers too little… CONTINUE READING

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