Minimum coverage regulation in insurance markets

Artículo de publicación ISIWe study the consequences of imposing a minimum coverage in an insurance market where enrollment is mandatory and agents have private information on their true risk type. If the regulation is not too stringent, the equilibrium is separating in which a single insurer monopolizes the high risks while the rest attract the low risks, all at positive profits. Hence individuals, regardless of their type, "subsidize" insurers. If the legislation is sufficiently stringent the equilibrium is pooling, all insurers just break even and low risks subsidize high risks. None of these results require resorting to non-Nash equilibrium notions.E. Morris Cox fund at the University of California, Berkeley USC Schaeffer Center for Health Economics and Policy at USC National Institute on Aging (NIA) P01 AG005842 RC4 AG039036 Institute for Research in Market Imperfections and Public Policy, Ministerio de Economia, Fomento y Turismo ICM IS130002 Ministerio de Educacion y Ciencia ECO2012-31962 ONCE Foundatio