Here’s the link to the paper you just referenced, for anyone else interested:
Unhealthy Insurance Markets: Search Frictions and the Cost and Quality of Health Insurance
Pertaining to the Health Care Industry in particular, the following thread may be of interest:
Where are good resources that make the case for Free Market Healthcare?
There are also many prohibitive regulations that may lead to price exceeding marginal cost (P>MC) with laws that prevent competition and entry (Tom Woods elaborates in Rollback the reasons why prices are high: there are measures in place such that supply is reduced and demand is stimulated … leading to high prices).
Profit maximizing firms don’t produce where P=MC, but where MR=MC. In this case, if P>MC it means that resources aren’t being allocated to the industry in question sufficiently enough to do so; in other words, it’s not that these firms need more customers, it’s that there are some variables that are preventing resources from being allocated to the health care industry or, there are other variables outside cost analysis that are preventing production from expanding in the health insurance industry.
In an MSM economics textbook, only in pure competition does a profit-maximizing firm operate where P=MC because, by definition of what is called pure competition, P=MR=D. Health care insurance, based on MSM economic models, is not a perfectly competitive industry. As such, P will never equal MC but for government regulations to provide the “socially optimal price” (based on high school-level models which are based from a starting model of pure competition which is defined as lacking any competitive characteristics whatsoever -because all goods sold are perfectly homogeneous and infinitely divisible- and the idea that everyone has perfect information; in other words, the models don’t conform to reality).
So if this is the conclusion made by those who wrote the “best health economics award,” the same conclusion can be drawn in any economics textbook at the public library or local high school and still be as specious.