title: Health insurance and diversity of treatment.
abstract: We determine the optimal health policy mix when the average utility of patients increases with the supply of drugs available in a therapeutic class. Health risk coverage relies on two instruments, copayment and reference pricing, both of which affect the risk associated with health expenses and diversity of treatment. For a fixed supply of drugs, the reference pricing policy aims at minimizing expenses, in which case the equilibrium price of drugs is independent of the copayment rate. However, with an endogenous supply of drugs, diversity of treatment may susbtitute for insurance so that the reference pricing may depart from maximal cost-containment in order to promote entry. We next analyze the determinants of the optimal policy. While an increase in risk aversion, or in the side effect loss, increases diversity and decreases the copayment rate, an increase in entry cost decreases both diversity and the copayment rate.
authors.affiliation: University of Los Andes - Cede (Bogota), Colombia; Toulouse School of Economics, France.
authors.forename: David
authors.initials: D
authors.lastname: Bardey
authors.affiliation: Toulouse School of Economics, University of Toulouse 1 Capitole (CNRS), France.
authors.forename: Bruno
authors.initials: B
authors.lastname: Jullien
authors.affiliation: Toulouse School of Economics, University of Toulouse 1 Capitole (CNRS), France. Electronic address: jean-marie.lozachmeur@tse-fr.eu.
authors.forename: Jean-Marie
authors.initials: JM
authors.lastname: Lozachmeur
mesh_terms: D000465:Algorithms; D017047:Cost Sharing; D003695:Delivery of Health Care; D006801:Humans; D007348:Insurance, Health; D054539:Medication Therapy Management; D055553:Prescription Drugs / Q000191:economics / Q000600:supply & distribution
chemical_list: D055553:Prescription Drugs
keywords: Drug's market; Health insurance; I18; L11; L15; L51; Price regulation