IDEAS home Printed from https://ideas.repec.org/a/kap/atlecj/v43y2015i4p477-488.html
   My bibliography  Save this article

The Impact of Market Share on Health Insurance Premiums

Author

Listed:
  • Donald Alexander
  • Jon Neill

Abstract

It is usually argued that market concentration leads to higher prices. This well-known proposition has led to concern about the level of concentration in state health-insurance markets, since the largest insurer in many states has a market share greater than 50 %. Moreover, the data compiled by the American Medical Association indicates that insurance markets have become more concentrated over the last ten years. Thus, some have suggested that health insurance premiums would decrease significantly if state markets were made more competitive. This paper explores that proposition through a computational model and an empirical analysis of the relationship between the market share of the largest firm in a state and the average health insurance premium in that state. Copyright International Atlantic Economic Society 2015

Suggested Citation

  • Donald Alexander & Jon Neill, 2015. "The Impact of Market Share on Health Insurance Premiums," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(4), pages 477-488, December.
    • Handle: RePEc:kap:atlecj:v:43:y:2015:i:4:p:477-488
    DOI: 10.1007/s11293-015-9471-5
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11293-015-9471-5
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11293-015-9471-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gruber, Jonathan & Lettau, Michael, 2004. "How elastic is the firm's demand for health insurance?," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1273-1293, July.
    2. Wholey, Douglas & Feldman, Roger & Christianson, Jon B., 1995. "The effect of market structure on HMO premiums," Journal of Health Economics, Elsevier, vol. 14(1), pages 81-105, May.
    3. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, in: Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), Handbook of Health Economics, volume 2, chapter 0, pages 499-637, Elsevier.
    4. Moriya, Asako S. & Vogt, William B. & Gaynor, Martin, 2010. "Hospital prices and market structure in the hospital and insurance industries," Health Economics, Policy and Law, Cambridge University Press, vol. 5(4), pages 459-479, October.
    5. Dafny Leemore & Dranove David & Limbrock Frank & Scott Morton Fiona, 2011. "Data Impediments to Empirical Work on Health Insurance Markets," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(2), pages 1-24, January.
    6. Heim, Bradley T. & Lurie, Ithai Z., 2009. "Do increased premium subsidies affect how much health insurance is purchased? Evidence from the self-employed," Journal of Health Economics, Elsevier, vol. 28(6), pages 1197-1210, December.
    7. Laurie J. Bates & James I. Hilliard & Rexford E. Santerre, 2012. "Do Health Insurers Possess Market Power?," Southern Economic Journal, John Wiley & Sons, vol. 78(4), pages 1289-1304, April.
    8. Bergson, Abram, 1973. "On Monopoly Welfare Losses," American Economic Review, American Economic Association, vol. 63(5), pages 853-870, December.
    9. Foreman, Stephen Earl & Wilson, John Anderson & Scheffler, Richard M, 1996. "Monopoly, Monopsony and Contestability in Health Insurance: A Study of Blue Cross Plans," Economic Inquiry, Western Economic Association International, vol. 34(4), pages 662-677, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Josh Matti, 2020. "Reaching for the Stars: Spatial Competition and Consumer Reviews," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 48(3), pages 339-353, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Trish, Erin E. & Herring, Bradley J., 2015. "How do health insurer market concentration and bargaining power with hospitals affect health insurance premiums?," Journal of Health Economics, Elsevier, vol. 42(C), pages 104-114.
    2. Sandra Rodriguez A., 2015. "Poder de monopsonio en el mercado de aseguramiento en salud en Colombia," Revista de Economía del Caribe 14779, Universidad del Norte.
    3. Berden, Carolien & Croes, R. & Kemp, R. & Mikkers, Misja & van der Noll, Rob & Shestalova, V. & Svitak, Jan, 2019. "Hospital Competition in the Netherlands : An Empirical Investigation," Discussion Paper 2019-008, Tilburg University, Tilburg Law and Economic Center.
    4. Pelech, Daria, 2017. "Dropped out or pushed out? Insurance market exit and provider market power in Medicare Advantage," Journal of Health Economics, Elsevier, vol. 51(C), pages 98-112.
    5. R. Halbersma & M. Mikkers & E. Motchenkova & I. Seinen, 2011. "Market structure and hospital–insurer bargaining in the Netherlands," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 12(6), pages 589-603, December.
    6. Zack Cooper & Stuart V Craig & Martin Gaynor & John Van Reenen, 2019. "The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(1), pages 51-107.
    7. Martin Gaynor & Kate Ho & Robert J. Town, 2015. "The Industrial Organization of Health-Care Markets," Journal of Economic Literature, American Economic Association, vol. 53(2), pages 235-284, June.
    8. Liu, Yiyan & Jin, Ginger Zhe, 2015. "Employer contribution and premium growth in health insurance," Journal of Health Economics, Elsevier, vol. 39(C), pages 228-247.
    9. Leemore Dafny & Mark Duggan & Subramaniam Ramanarayanan, 2012. "Paying a Premium on Your Premium? Consolidation in the US Health Insurance Industry," American Economic Review, American Economic Association, vol. 102(2), pages 1161-1185, April.
    10. Kamyar Nasseh & John R. Bowblis & Marko Vujicic & Sean Shenghsiu Huang, 2020. "Consolidation in the dental industry: a closer look at dental payers and providers," International Journal of Health Economics and Management, Springer, vol. 20(2), pages 145-162, June.
    11. Jeffrey Clemens & Joshua D. Gottlieb, 2017. "In the Shadow of a Giant: Medicare’s Influence on Private Physician Payments," Journal of Political Economy, University of Chicago Press, vol. 125(1), pages 1-39.
    12. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, in: Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), Handbook of Health Economics, volume 2, chapter 0, pages 499-637, Elsevier.
    13. Ye, Jinqi, 2015. "The effect of Health Savings Accounts on group health insurance coverage," Journal of Health Economics, Elsevier, vol. 44(C), pages 238-254.
    14. Brunt, Christopher S. & Bowblis, John R., 2014. "Health insurer market power and primary care consolidation," Economics Letters, Elsevier, vol. 125(1), pages 61-65.
    15. Scott E. Harrington, 2011. "The Continuing Debate on Health Insurance Reform," NFI Policy Briefs 2011-PB-09, Indiana State University, Scott College of Business, Networks Financial Institute.
    16. Andrew Stocking & James Baumgardner & Melinda Buntin & Anna Cook, 2014. "Examining the Number of Competitors and the Cost of Medicare Part D: Working Paper 2014-04," Working Papers 45553, Congressional Budget Office.
    17. Yiyan Liu & Ginger Zhe Jin, 2013. "Employer Contribution and Premium Growth in Health Insurance," NBER Working Papers 19760, National Bureau of Economic Research, Inc.
    18. Fossen, Frank M. & König, Johannes, 2015. "Public health insurance and entry into self-employment," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112934, Verein für Socialpolitik / German Economic Association.
    19. Filistrucchi, L. & Ozbugday, F.C., 2012. "Mandatory Quality Disclosure and Quality Supply : Evidence from German Hospitals," Other publications TiSEM 680b0e3e-d3f5-4b91-9803-8, Tilburg University, School of Economics and Management.
    20. David M. Cutler & Louise Sheiner, 1998. "Managed Care and the Growth of Medical Expenditures," NBER Chapters, in: Frontiers in Health Policy Research, Volume 1, pages 77-116, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Market share; Health insurance premiums; Competition; I11; L11; L13; L30;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:atlecj:v:43:y:2015:i:4:p:477-488. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.