Competition in Insurance Markets
The goal for today is to examine the role of competition in health insurance, including “managed competition”. Focus areas and selected papers are listed below.
Managed Competition
The U.S. health insurance model increasingly relies on private insurance even for government-sponsored programs like Medicare and Medicaid. This model is based on the idea of “managed competition”, which relies on market forces to improve the efficiency of health insurance markets. We’ll discuss Cabral, Geruso, and Mahoney (2018) and Curto et al. (2021) as examples of papers in this area. Cabral, Geruso, and Mahoney (2018) cautions against the assumption that increased subsidies will directly benefit consumers, emphasizing the need for careful design and regulation of subsidy mechanisms, and Curto et al. (2021) examines the potential for competition to improve consumer outcomes in these markets. Both papers underscore the importance of balancing market forces with effective regulation to achieve the goals of managed competition in government-sponsored health insurance programs.