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Why are the markets for health insurance so much more price-competitive than the markets for medical...

Why are the markets for health insurance so much more price-competitive than the markets for medical care?

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The markets for health insurance are so much more price competitive than the markets for medical care because in case of medical insurance decision of one firm severely impact the decision of another firm. Thus, strategic decision making plays an important role in the market of health insurance. This is mainly oligopoly form of market with some market failures also. Market failure is also one of the reasons of high prices in the market for medical insurance. The hidden information and hidden costs leads to very high price competition in such markets. On the other hand, the market for medical care is not based on strategic decision making and thus price competition is not so high in the market for medical care.

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