You are kindly invited to de Economics Department's seminar, where it will be presented the article called "Equilibrium Effects of Health Insurance Selection on th Hospital Market".

Presents: Wei Xiong, Assistant Professor, Los Andes University.

This paper studies how selection outcomes in an individual insurance market shape the hospital market. In a setting with horizontally and vertically differentiated hospitals, consumers who prefer high-quality but expensive 'star' hospitals are costlier to insure. Competitive multi-plan insurers respond by offering tiered- and narrow-network plans to attract consumers less likely to use expensive providers. However, enrollment in these plans reduces the average coverage that insurers assume at star hospitals and weakens insurers' bargaining incentives, creating a feedback loop that elevates star hospital prices and enlarges the premium differences between network policies. Using industry-wide claims and enrollment data from Chile, I estimate that insurers' tiered provider networks explain 18% of the observed three-fold price ratio between high- and low-cost hospitals. Eliminating network choices mitigates both adverse and advantageous selection on hospital preferences, shifts patients toward star hospitals, and reduces profitability disparities across providers.

The event will be held in a 1605 classroom.

Kind regards,

Research Direction