Moving from a bad to a good pricing regime : the South African private health care market
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Date
Authors
Picard, Eric
Zimper, Alexander
Journal Title
Journal ISSN
Volume Title
Publisher
Wiley
Abstract
The South African private health care market combines a highly concentrated demand side with expensive medical services. This combination suggests that medical insurance schemes are not using their full market power. To explain this puzzle, we construct a delegated bargaining model in which agency costs give rise to two different pricing regimes. In the ‘good’ pricing regime, the scheme incentivises its administrator towards aggressive bargaining behaviour with health care providers. The ‘bad’ pricing regime results when the scheme decides against such incentivation. Policy measures that push the number of providers above some critical threshold can force a change from the ‘bad’ to the ‘good’ pricing regime.
Description
Keywords
Market power, Moral hazard, Regulation, Strategic bargaining
Sustainable Development Goals
Citation
Picard, E. & Zimper, A. (2022) Moving from a bad to a good pricing regime: The South African private health care market. South African Journal of Economics, 90(2), 260–276. Available from:https://doi.org/10.1111/saje.12306.