Unhealthy insurance markets: search frictions and the cost and quality of health insurance

Front Cover
National Bureau of Economic Research, 2008 - Business & Economics - 27 pages
Health insurance is a complex, multi-attribute product and this creates search frictions that can distort market outcomes. We study the effect of frictions in the market for employer based health insurance. We find that frictions are most severe in the "fully insured" part of the group health insurance market and we estimate that frictions in this market segment cause a quarter of the consumer surplus to shift from policy-holders to insurers (a transfer of 32.5 billion dollars in 1997). Our analysis also suggests that frictions in insurance markets also reduce incentives to invest in future health.

From inside the book

What people are saying - Write a review

We haven't found any reviews in the usual places.

Common terms and phrases

Bibliographic information