IDEAS home Printed from https://ideas.repec.org/a/wly/soecon/v70y2004i4p1012-1031.html
   My bibliography  Save this article

Employment‐Based Health Insurance and the Effectiveness of Intrafirm Competition between Insurance Providers

Author

Listed:
  • W. David Bradford
  • Lee Rivers Mobley

Abstract

This paper examines the effects of competition between insurers for the patronage of a firm's employees. Since for employment‐based health insurance the employee choice of health insurance plans is often limited, the availability of competing plans in the market does not necessarily reflect competition within the firm. We utilize data from the 1987 National Medical Expenditures Survey (NMES) to examine the effect of intra firm competition in the employment‐based health insurance market. Using switching regression models, we explore the process that sets premiums and the process that sets the net premium/medical cost margins. We find that greater choice results in higher margins and lower premiums. We also find significantly negative health maintenance organization choice effects on both premiums and margins.

Suggested Citation

  • W. David Bradford & Lee Rivers Mobley, 2004. "Employment‐Based Health Insurance and the Effectiveness of Intrafirm Competition between Insurance Providers," Southern Economic Journal, John Wiley & Sons, vol. 70(4), pages 1012-1031, April.
    • Handle: RePEc:wly:soecon:v:70:y:2004:i:4:p:1012-1031
    DOI: 10.1002/j.2325-8012.2004.tb00617.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/j.2325-8012.2004.tb00617.x
    Download Restriction: no
    File URL: https://libkey.io/10.1002/j.2325-8012.2004.tb00617.x?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
    ---><---

    References listed on IDEAS

    as
    1. Alan C. Monheit & Jessica Primoff Vistnes, 1999. "Health Insurance Availability at the Workplace: How Important are Worker Preferences?," Journal of Human Resources, University of Wisconsin Press, vol. 34(4), pages 770-785.
    2. Pauly, Mark V., 1988. "Market power, monopsony, and health insurance markets," Journal of Health Economics, Elsevier, vol. 7(2), pages 111-128, June.
    3. Dranove, David & Spier, Kathryn E. & Baker, Laurence, 2000. "'Competition' among employers offering health insurance," Journal of Health Economics, Elsevier, vol. 19(1), pages 121-140, January.
    4. Roger Feldman & Michael Finch & Bryan Dowd & Steven Cassou, 1989. "The Demand for Employment-Based Health Insurance Plans," Journal of Human Resources, University of Wisconsin Press, vol. 24(1), pages 115-142.
    5. Ellis, Randall P, 1989. "Employee Choice of Health Insurance," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 215-223, May.
    6. Mark A. Satterthwaite, 1979. "Consumer Information, Equilibrium Industry Price, and the Number of Sellers," Bell Journal of Economics, The RAND Corporation, vol. 10(2), pages 483-502, Autumn.
    7. David Cutler, 1994. "Market Failure in Small Group Health Insurance," NBER Working Papers 4879, National Bureau of Economic Research, Inc.
    8. Roger Feldman & Bryan Dowd & Scott Leitz & Lynn A. Blewett, 1997. "The Effect of Premiums on the Small Firm's Decision to Offer Health Insurance," Journal of Human Resources, University of Wisconsin Press, vol. 32(4), pages 635-658.
    9. Jensen, Gail & Feldman, Roger & Dowd, Bryan, 1984. "Corporate benefit policies and health insurance costs," Journal of Health Economics, Elsevier, vol. 3(3), pages 275-296, December.
    10. Jensen, Gail A & Gabel, Jon R, 1992. "State Mandated Benefits and the Small Firm's Decision to Offer Insurance," Journal of Regulatory Economics, Springer, vol. 4(4), pages 379-404, December.
    Full references (including those not matched with items on IDEAS)

    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. Jean Marie Abraham & William B. Vogt & Martin Gaynor, 2002. "Household Demand for Employer-Based Health Insurance," NBER Working Papers 9144, National Bureau of Economic Research, Inc.
    2. Alan C. Monheit & Thomas M. Selden, 2000. "Cross‐subsidization in the market for employment‐related health insurance," Health Economics, John Wiley & Sons, Ltd., vol. 9(8), pages 699-714, December.
    3. Colla Carrie H. & Dow William H. & Dube Arindrajit, 2013. "How Do Employers React to a Pay-or-Play Mandate? Early Evidence from San Francisco," Forum for Health Economics & Policy, De Gruyter, vol. 14(1), pages 1-2, November.
    4. Martin Gaynor, 1994. "Issues in the Industrial Organization of the Market for Physician Services," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 211-255, March.
    5. Richard Hirth & Reagan Baughman & Michael Chernew & Emily Shelton, 2006. "Worker preferences, sorting and aggregate patterns of health insurance coverage," International Journal of Health Economics and Management, Springer, vol. 6(4), pages 259-277, December.
    6. M. Kate Bundorf, 2010. "The Effects of Offering Health Plan Choice Within Employment‐Based Purchasing Groups," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 77(1), pages 105-127, March.
    7. Steven F. Lehrer & Nuno Sousa Pereira, 2008. "Worker Sorting, Health Insurance and Wages: Further Evidence from Displaced Workers in the United States," CEF.UP Working Papers 0804, Universidade do Porto, Faculdade de Economia do Porto.
    8. Lehrer, Steven F. & Pereira, Nuno Sousa, 2007. "Worker sorting, compensating differentials and health insurance: Evidence from displaced workers," Journal of Health Economics, Elsevier, vol. 26(5), pages 1034-1056, September.
    9. Ricardo Sanhueza & Jaime Ruiz-Tagle, 2002. "Choosing Health Insurance in a Dual Health Care System: The Chilean Case," Journal of Applied Economics, Universidad del CEMA, vol. 5, pages 157-184, May.
    10. Barton H. Hamilton & James Marton, 2008. "Employee choice of flexible spending account participation and health plan," Health Economics, John Wiley & Sons, Ltd., vol. 17(7), pages 793-813, July.
    11. Kate Bundorf, M., 2002. "Employee demand for health insurance and employer health plan choices," Journal of Health Economics, Elsevier, vol. 21(1), pages 65-88, January.
    12. Jean Marie Abraham & Thomas DeLeire & Annne Beeson Royalty, 2007. "Health Insurance, Pensions, and Paid Leave: Access to Health Insurance at Small Firms in a Broader Benefit Context: Working Paper 2007-08," Working Papers 18725, Congressional Budget Office.
    13. C. J. Krizan & Adela Luque & Alice Zawacki, 2014. "The Effect Of Employer Health Insurance Offering On The Growth And Survival Of Small Business Prior To The Affordable Care Act," Working Papers 14-22, Center for Economic Studies, U.S. Census Bureau.
    14. Kanika Kapur & Pinar Karaca‐Mandic & Susan M. Gates & Brent Fulton, 2012. "Do Small‐Group Health Insurance Regulations Influence Small Business Size?," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 79(1), pages 231-260, March.
    15. Martin Gaynor & Deborah Haas-Wilson, 1999. "Change, Consolidation, and Competition in Health Care Markets," Journal of Economic Perspectives, American Economic Association, vol. 13(1), pages 141-164, Winter.
    16. Alan C. Monheit & Jessica Primoff Vistnes, 2006. "Health Insurance Enrollment Decisions: Preferences for Coverage, Worker Sorting, and Insurance Take Up," NBER Working Papers 12429, National Bureau of Economic Research, Inc.
    17. Kanika Kapur, 2003. "Labor Market Implications of State Small Group Health Insurance Reform," Public Finance Review, , vol. 31(6), pages 571-600, November.
    18. Xuguang Guo & Ran Tao, 2015. "Health Benefit Downward Rigidity: Employers’ Responses to Rising Insurance Costs," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 18(2), pages 217-241, September.
    19. repec:eee:labchp:v:3:y:1999:i:pc:p:3309-3416 is not listed on IDEAS
    20. Gaynor, Martin & Vogt, William B., 2000. "Antitrust and competition in health care markets," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 27, pages 1405-1487, Elsevier.
    21. Shore-Sheppard, Lara & Buchmueller, Thomas C. & Jensen, Gail A., 2000. "Medicaid and crowding out of private insurance: a re-examination using firm level data," Journal of Health Economics, Elsevier, vol. 19(1), pages 61-91, January.

    More about this item

    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:wly:soecon:v:70:y:2004:i:4:p:1012-1031. 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: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2325-8012 .

    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.