Bundling in General Markets and in Health Care Systems

This paper provides an overview of bundling, by explaining, in general, the different forms that this practice can take in selling, buying or exchanging goods. We then proceed with a linear programming formulation in health care, to explain how the price of a bundle of resources can be calculated. We follow this by looking at the specific case of the practice of bundling by Medicare, the social insurance system for health care in the United States. We consider its advantages, disadvantages, and various recommendations.