IDEAS home Printed from https://ideas.repec.org/p/cpb/discus/152.html
   My bibliography  Save this paper

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
    as

    Download full text from publisher

    File URL: https://www.cpb.nl/sites/default/files/publicaties/download/health-insurance-competition.pdf
    Download Restriction: no
    ---><---

    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.
    2. Rudy Douven & E. Schut, 2006. "Health plan pricing behaviour and managed competition," CPB Discussion Paper 61, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Evans, Robert G., 1987. "Public health insurance: the collective purchase of individual care," Health Policy, Elsevier, vol. 7(2), pages 115-134, April.
    4. Machiel Dijk & Marc Pomp & Rudy Douven & Trea Laske-Aldershof & Erik Schut & Willem Boer & Anne Boo, 2008. "Consumer price sensitivity in Dutch health insurance," International Journal of Health Economics and Management, Springer, vol. 8(4), pages 225-244, December.
    5. Rudy Douven & Marco Ligthart & H. Lieverdink & I. Vermeulen, 2007. "Measuring annual price elasticities in Dutch health insurance; a new method," CPB Discussion Paper 90, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Brooks, John M. & Dor, Avi & Wong, Herbert S., 1997. "Hospital-insurer bargaining: An empirical investigation of appendectomy pricing," Journal of Health Economics, Elsevier, vol. 16(4), pages 417-434, August.
    7. Alan T. Sorensen, 2003. "Insurer‐hospital bargaining: negotiated discounts in post‐deregulation connecticut," Journal of Industrial Economics, Wiley Blackwell, vol. 51(4), pages 469-490, December.
    8. Jensen, Gail A & Morrisey, Michael A, 1990. "Group Health Insurance: A Hedonic Price Approach," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 38-44, February.
    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. Boone, J. & Douven, R.C.M.H. & Droge, C. & Mosca, I., 2010. "Health Insurance Competition : The Effect of Group Contracts," Discussion Paper 2010-55, Tilburg University, Center for Economic Research.
    2. Boone, J. & Douven, R.C.M.H. & Droge, C. & Mosca, I., 2010. "Health Insurance Competition : The Effect of Group Contracts," Other publications TiSEM 44af3534-397e-45cd-b1f9-5, Tilburg University, School of Economics and Management.
    3. ., 2012. "Models of Negotiation and Bargaining in Health Care," Chapters, in: Andrew M. Jones (ed.), The Elgar Companion to Health Economics, Second Edition, chapter 21, Edward Elgar Publishing.
    4. Rabbani, Maysam, 2023. "Mergers with future rivals can boost prices, bar entry, and intensify market concentration," International Journal of Industrial Organization, Elsevier, vol. 88(C).
    5. 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.
    6. Jonas Pendzialek & Dusan Simic & Stephanie Stock, 2016. "Differences in price elasticities of demand for health insurance: a systematic review," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(1), pages 5-21, January.
    7. Rudy Douven & Katalin Katona & Frederik Schut & Victoria Shestalova, 2017. "Switching gains and health plan price elasticities: 20 years of managed competition reforms in The Netherlands," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(8), pages 1047-1064, November.
    8. David Bardey & Jean‐Charles Rochet, 2010. "Competition Among Health Plans: A Two‐Sided Market Approach," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(2), pages 435-451, June.
    9. Rudy Douven & Katalin Katona & Erik Schut & Victoria Shestalova, 2017. "Switching gains and health plan price elasticities: 20 years of managed competition reforms in the Netherlands," CPB Discussion Paper 343.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    10. Andree Ehlert & Thomas Wein & Peter Zweifel, 2017. "Overcoming resistance against managed care – insights from a bargaining model," Health Economics Review, Springer, vol. 7(1), pages 1-15, December.
    11. Eddy Cardinaels & Naomi Soderstrom, 2013. "Managing in a Complex World: Accounting and Governance Choices in Hospitals," European Accounting Review, Taylor & Francis Journals, vol. 22(4), pages 647-684, December.
    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. David Bardey & Giancarlo Buitrago, 2015. "Integración vertical en el sector de la salud colombiano," Documentos CEDE 14069, Universidad de los Andes, Facultad de Economía, CEDE.
    14. Rudy Douven & Katalin Katona & Erik Schut & Victoria Shestalova, 2017. "Switching gains and health plan price elasticities: 20 years of managed competition reforms in the Netherlands," CPB Discussion Paper 343, CPB Netherlands Bureau for Economic Policy Analysis.
    15. Anne-Fleur Roos & Frederik Schut, 2012. "Spillover effects of supplementary on basic health insurance: evidence from the Netherlands," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(1), pages 51-62, February.
    16. Wu, Vivian Y., 2009. "Managed care's price bargaining with hospitals," Journal of Health Economics, Elsevier, vol. 28(2), pages 350-360, March.
    17. Pendzialek, Jonas B. & Danner, Marion & Simic, Dusan & Stock, Stephanie, 2015. "Price elasticities in the German Statutory Health Insurance market before and after the health care reform of 2009," Health Policy, Elsevier, vol. 119(5), pages 654-663.
    18. Douven, Rudy C.H.M. & Schut, Frederik T., 2011. "Pricing behaviour of nonprofit insurers in a weakly competitive social health insurance market," Journal of Health Economics, Elsevier, vol. 30(2), pages 439-449, March.
    19. Fischer, Barbara & Telser, Harry & Zweifel, Peter & von Wyl, Viktor & Beck, Konstantin & Weber, Andreas, 2023. "The value of a QALY towards the end of life and its determinants: Experimental evidence," Social Science & Medicine, Elsevier, vol. 326(C).
    20. Rachel Kreier & Bhaswati Sengupta, 2015. "Income, Health, and the Value of Preserving Options," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(4), pages 431-448, December.

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:cpb:discus:152. 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/cpbgvnl.html .

    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.