Health insurer monopsony power: the all-or-none model.
The textbook model of monopsony that is typically employed in analyzing health insurer monopsony power does not adequately describe the supply decision of physicians confronting a dominant health insurer. Rather than restricting purchases in order to extract a lower price for provider services, monopsonistic insurers are able to obtain discounts from providers without experiencing a decrease in quantity when physicians are forced to operate along their "all-or-none" supply curve. The welfare effects of the all-or-none model of monopsony are compared to those implied by the traditional model.
Herndon
Jill Boylston
JB
Department of Economics, University of Florida, Gainesville 32611-7140, USA. jill_b_herndon@notes.cba.ufl.edu
D016363:Antitrust Laws; D003284:Contract Services / Q000191:economics*; D003657:Decision Making; D004465:Economic Competition; D004992:Ethics, Medical; D007343:Insurance Carriers / Q000191:economics*; D007349:Insurance, Health, Reimbursement; D007357:Insurance, Physician Services / Q000191:economics*; D008329:Managed Care Programs / Q000191:economics; D018803:Models, Economic; D017008:Negotiating; D010820:Physicians / Q000191:economics*; D011209:Power, Psychological; D014481:United States