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Health insurance competition: The effect of group contracts

Author

Listed:
  • Jan Boone

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Rudy Douven

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • C. Droge
  • I. Mosca

Abstract

The strategic and welfare implications of group contracts for health insurance are not well understood. We estimate a model to determine which factors explain the price of group contracts. In countries like the US and the Netherlands health insurance is provided by private firms, which can offer both individual and group contracts. Using a Dutch data set of about 700 group health insurance contracts over the period 2007-2008, we find that groups that are located close to an insurers’ home turf pay a higher premium than other groups. This finding is not consistent with the bargaining argument in the literature, as it implies that concentrated groups close to an insurer’s home turf should get a larger discount (if any) than other groups. A simple Hotelling model, however, does explain our empirical results.

Suggested Citation

  • Jan Boone & Rudy Douven & C. Droge & I. Mosca, 2010. "Health insurance competition: The effect of group contracts," CPB Discussion Paper 152, CPB Netherlands Bureau for Economic Policy Analysis.
    • Handle: RePEc:cpb:discus:152
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    References listed on IDEAS

    as
    1. Peter Zweifel & Harry Telser & Stephan Vaterlaus, 2006. "Consumer Resistance Against Regulation: The Case of Health Care," Journal of Regulatory Economics, Springer, vol. 29(3), pages 319-332, May.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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