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Health insurer market power and employer size: an empirical evaluation of insurer concentration and wages through compensating differentials

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  • Christopher S. Brunt
  • John R. Bowblis

Abstract

This article explores the differentiated effects of health insurer market concentration on net compensation of employees across distinct firm sizes. Consistent with the existing literature evaluating insurer market concentration and the theory of compensating differentials, we find evidence of higher premiums and reduced net compensation for employees in markets with more concentrated insurers. Furthermore, we find evidence that the magnitude of these effects is distinctly smaller for large employers. This implies that mergers of large health insurance companies may have a significant impact on small businesses but that the effect is mitigated for larger employers.

Suggested Citation

  • Christopher S. Brunt & John R. Bowblis, 2017. "Health insurer market power and employer size: an empirical evaluation of insurer concentration and wages through compensating differentials," Applied Economics, Taylor & Francis Journals, vol. 49(30), pages 3005-3015, June.
    • Handle: RePEc:taf:applec:v:49:y:2017:i:30:p:3005-3015
    DOI: 10.1080/00036846.2016.1251569
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    References listed on IDEAS

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    1. Leemore Dafny & Jonathan Gruber & Christopher Ody, 2014. "More Insurers Lower Premiums: Evidence from Initial Pricing in the Health Insurance Marketplaces," NBER Working Papers 20140, National Bureau of Economic Research, Inc.
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