Common Contracts
1 similar null contracts
Health Insurance as a Two-Part Pricing Contract *September 24th, 2021
Monopolies appear throughout health care, as a result of patents, limits to the extent of the market, or the presence of unique inputs and skills. Health insurance, often implemented as an ex ante premium coupled with an ex post co-payment per unit consumed, effectively operates as a two-part pricing contract that allows monopolists to extract profits from consumers without inefficiently constraining quantity. The efficiency of this downstream nonlinear pricing arrangement alters the welfare analysis of monopoly in the context of health care. At the limit, frictionless and competitive health insurance markets, even under incomplete or asymmetric information, perfectly eliminate deadweight losses from upstream monopoly in health care. Frictions limiting downstream
