پراکندگی قیمت در صنعت بیمه درمانی خصوصی : در مورد کاتالونیا

This paper presents a vertical and horizontal product differentiation model that explains price dispersion among different kinds of health care insurance firms. Our model shows large insurance firms engaging in price competition with small mutual organizations that serve only a local area and charge lower premiums. We found that, although the market allows the entry of an excessive number of firms, the presence of local insurance companies increases social welfare by increasing the range of products available to consumers. Our conclusions are applicable to OECD countries in general although we rely on Catalonia's data

In one third of OECD countries, 30% or more of their population has a private health insurance (PHI). The importance of PHI in each one of these countries is conditioned by the implantation of public health (Colombo and Tapay, 2004). Thus, whereas 35% of the population of the USA has PHI, this percentage decreases to 20% in Spain, 12.5% in Germany and 1% in Italy. From another perspective, whereas in some OECD countries PHI is an alternative to public health in others it is complementary to it. The Spanish “Sistema Nacional de Salud” (National Health System) is a public healthcare decentralized mechanism that provides universal coverage. However, in addition to the taxes paid to finance public healthcare, almost a quarter of the population of Spain also pay an insurance premium to use private healthcare services. People pay a double coverage to access a greater number of healthcare providers, better hospital accommodation and shorter waiting lists.1 Spanish insurance firms providing health services establish a contractual relationship between healthcare providers, hospitals and doctors, and the insurance company (similar to USA's ‘managed care’) and account for approximately 90% of all health insurance plans. Health insurers that provide reimbursement of expenses (‘traditional health insurance plans’ in the USA) only account for the remaining 10%. A recurrent fact of the health insurance industry is price dispersion. Literature explains it from clients' search costs, when they search prices and service qualities, and switching costs, when they decide to use a new provider (Gravelle and Masiero, 2000 and Schlesinger and von der Schulenburg, 1991), factors both, implying a quite profitable industry. However, Spanish health insurance industry evidences low search and switching costs, because firms do not tend to penalize the newly insured, and they provide lists of health service providers, thereby limiting clients' search costs.2 Furthermore, Spain's PHI companies do not enjoy huge profits, as their financial results show.3 In consequence, the usual explanation of price dispersion, from search and switching costs, does not apply to Spanish health insurers. The purpose of this paper is to explain that the largest dimension implies higher premiums among PHI firms, from an oligopoly model based on location and vertical differentiation, instead of search and switching costs. Schlesinger and von der Schulenburg (1991) previously used a horizontal differentiation model but they introduced switching costs. Our model captures, on the one hand, that large health insurers provide access to a long list of hospitals and healthcare professionals, whereas small mutual organizations are usually linked to a single hospital and have agreements with a small number of doctors; and on the other hand, that local firms compete with larger ones offering a wider range of healthcare services.4 We consider a game with entry and market stages and we cope with the difficulties imposed by a free entry equilibrium of unequal sized firms, by using the concept of equilibrium configuration (Sutton, 1998), which is based on two conditions, viability and stability, that are applied directly to outcomes rather than to strategies. Models of switching costs, such as Padilla (1994), propose that the Spanish health insurance market is uncompetitive, has high profit margins and the entry of new firms will have a negative effect on social welfare. Our model also explains price dispersion, but, in contrast, we conclude that the entry of small, local, mutual organizations boosts competition, reduces the consumers' transport costs bringing more product variety to the market, and increases social welfare: firms' profits are lower and the welfare level is higher under this configuration than if there were only large health insurers. The health system in Spain is decentralized. La Generalitat is the governmental body responsible for the regulation and control of the healthcare system in Catalonia, and provides detailed data of its health insurance industry, which is not available for other Spanish regions. For this reason, we have focused the study to Catalonia, even though this work's conclusions are applicable to all Spanish regions and to other OECD countries as well. In fact, our results are applicable to either relatively low concentrated industry in which, for the one hand, location near the final consumer defines a small niche or market segment, and for the other hand, product's quality and firm's market share are directly related, as is the case of the PHI industry.5 The rest of this paper is organized as follows: Section 2 introduces some data. Section 3 presents the model and Section 4 solves it by applying the concept of equilibrium configuration; Section 5 discusses welfare implications; and finally, Section 6 presents our conclusions.

As the traditional explanations of price dispersion in the PHI industry from search and switching costs have limited scope, we have developed an oligopoly model by means of a two-stage game with horizontal and vertical differentiation and price competition that explains price dispersion in this market. In our model, large insurance companies, which offer high-quality healthcare services by providing access to a large number of healthcare providers, engage in price competition among them and with small, local mutual organizations that provide a limited range of medical services. We solve the two-stage game applying the concept of equilibrium configuration (Sutton, 1998), which incorporates two conditions, viability and stability that apply directly to outcomes rather than to strategies, and we get that, in equilibrium, large insurance companies set higher prices than the small-local firms. La Generalitat, the Catalonian Government, provides detailed PHI statistical information that gives support to our results, but they are applicable also to Spanish regions other than Catalonia, or in general, to other OECD countries, although they do not provide PHI data with the same quality and detail as La Generalitat does. Like most models of this type, our model shows that the market generates too much variety: the efficient number of firms is smaller than the equilibrium one. Notwithstanding the excessive number of firms, we have proved that welfare is higher with local firms than without them. That is, we get a highly counterintuitive proposition: the entry of small local health insurance firms in an industry with an excess of capacity increases social welfare. The presence of local firms, with low entry sunk costs, enhances competition and lowers prices, consumer's transportation costs and firms' profits and increases welfare.