Health insurance coverage, income distribution and healthcare quality in local healthcare markets.
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.
Department of Economics and Finance, University of Texas-Pan American, Edinburg, Texas, USA.
Damian S
DS
Damianov
José A
JA
Pagán
D003695:Delivery of Health Care / Q000191:economics / Q000592:standards / Q000706:statistics & numerical data; D018166:Health Care Reform / Q000191:economics / Q000592:standards / Q000706:statistics & numerical data; D019981:Health Care Sector / Q000191:economics / Q000592:standards / Q000706:statistics & numerical data*; D006801:Humans; D007182:Income / Q000706:statistics & numerical data*; D019458:Insurance Coverage / Q000191:economics / Q000706:statistics & numerical data*; D007348:Insurance, Health / Q000191:economics / Q000706:statistics & numerical data*; D008962:Models, Theoretical; D011787:Quality of Health Care / Q000191:economics / Q000706:statistics & numerical data*; D019472:Universal Health Insurance / Q000191:economics / Q000592:standards / Q000706:statistics & numerical data