IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/18286.html
   My bibliography  Save this paper

Does it Matter if Your Health Insurer is For-Profit? Effects of Ownership on Premiums, Insurance Coverage, and Medical Spending

Author

Listed:
  • Leemore Dafny
  • Subramaniam Ramanarayanan

Abstract

The majority of private health insurance in the U.S. is administered or issued by for-profit insurers, but little is known about how for-profit status affects outcomes. We find that plausibly exogenous increases in local for-profit market share induced by conversions of Blue Cross and Blue Shield affiliates in 11 states (and 28 distinct geographic markets) had no significant impact on average premiums, uninsurance rates, or medical loss ratios. However, we do find significant increases in Medicaid enrollment and a reallocation of medical spending toward rivals of BCBS. Moreover, in markets where the converting BCBS affiliate had substantial market share, fully-insured premiums for employer plans increased significantly. The results suggest that the welfare effects of subsidies for new not-for-profit insurers, such as those in the Affordable Care Act, are likely to depend on entrants' eventual market share.

Suggested Citation

  • Leemore Dafny & Subramaniam Ramanarayanan, 2012. "Does it Matter if Your Health Insurer is For-Profit? Effects of Ownership on Premiums, Insurance Coverage, and Medical Spending," NBER Working Papers 18286, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:18286
    Note: AG EH IO
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    References listed on IDEAS

    as
    1. Janet Currie & Jonathan Gruber, 1996. "Health Insurance Eligibility, Utilization of Medical Care, and Child Health," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(2), pages 431-466.
    2. David M. Cutler, 2000. "Introduction to "The Changing Hospital Industry: Comparing For-Profit and Not-for-Profit Institutions"," NBER Chapters, in: The Changing Hospital Industry: Comparing Not-for-Profit and For-Profit Institutions, pages 1-10, National Bureau of Economic Research, Inc.
    3. repec:mpr:mprres:3165 is not listed on IDEAS
    4. Adamache, Killard W. & Sloan, Frank A., 1983. "Competition between non-profit and for-profit health insurers," Journal of Health Economics, Elsevier, vol. 2(3), pages 225-243, December.
    5. Robert Town & Roger Feldman & Douglas Wholey, 2004. "The Impact of Ownership Conversions on HMO Performance," International Journal of Health Economics and Management, Springer, vol. 4(4), pages 327-342, December.
    6. repec:mpr:mprres:3164 is not listed on IDEAS
    7. Mark Duggan, 2002. "Hospital Market Structure and the Behavior of Not-For-Profit Hospitals," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 433-446, Autumn.
    8. David M. Cutler & Jill Horwitz, 2000. "Converting Hospitals from No t-for-Profit to For-Profit Status Why and What Effects?," NBER Chapters, in: The Changing Hospital Industry: Comparing Not-for-Profit and For-Profit Institutions, pages 45-90, National Bureau of Economic Research, Inc.
    9. 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.
    10. Leemore S. Dafny, 2010. "Are Health Insurance Markets Competitive?," American Economic Review, American Economic Association, vol. 100(4), pages 1399-1431, September.
    11. Silverman, Elaine & Skinner, Jonathan, 2004. "Medicare upcoding and hospital ownership," Journal of Health Economics, Elsevier, vol. 23(2), pages 369-389, March.
    12. David M. Cutler, 2000. "The Changing Hospital Industry: Comparing Not-for-Profit and For-Profit Institutions," NBER Books, National Bureau of Economic Research, Inc, number cutl00-1.
    13. Beaulieu Nancy Dean, 2004. "An Economic Analysis of Health Plan Conversions: Are They in the Public Interest?," Forum for Health Economics & Policy, De Gruyter, vol. 7(1), pages 1-51, January.
    14. Mark V. Pauly & Alan L. Hillman & Myoung S. Kim & Darryl R. Brown, "undated". "Competitive Behavior in the HMO Marketplace," Mathematica Policy Research Reports 69c2560be3844579bbf8d1a7d, Mathematica Policy Research.
    15. Gruber, Jonathan & Simon, Kosali, 2008. "Crowd-out 10 years later: Have recent public insurance expansions crowded out private health insurance?," Journal of Health Economics, Elsevier, vol. 27(2), pages 201-217, March.
    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. Steve Cicala & Ethan M.J. Lieber & Victoria Marone, 2017. "Cost of Service Regulation in U.S. Health Care: Minimum Medical Loss Ratios," NBER Working Papers 23353, National Bureau of Economic Research, Inc.
    2. Steve Cicala & Ethan M. J. Lieber & Victoria Marone, 2019. "Regulating Markups in US Health Insurance," American Economic Journal: Applied Economics, American Economic Association, vol. 11(4), pages 71-104, October.
    3. Elizabeth L. Munnich & Michael R. Richards, 2020. "Treatment flows after outsourcing public insurance provision: Evidence from Florida Medicaid," Health Economics, John Wiley & Sons, Ltd., vol. 29(11), pages 1343-1363, November.
    4. Keith M. Marzilli Ericson & Amanda Starc, 2015. "Pricing Regulation and Imperfect Competition on the Massachusetts Health Insurance Exchange," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 667-682, July.
    5. Leemore Dafny & Jonathan Gruber & Christopher Ody, 2015. "More Insurers Lower Premiums: Evidence from Initial Pricing in the Health Insurance Marketplaces," American Journal of Health Economics, MIT Press, vol. 1(1), pages 53-81, Winter.
    6. 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.
    7. Lieber, Ethan M.J., 2018. "Does health insurance coverage fall when nonprofit insurers become for-profits?," Journal of Health Economics, Elsevier, vol. 57(C), pages 75-88.
    8. Manan Roy, 2014. "How well does the U.S. Government provide health insurance for infants?," Empirical Economics, Springer, vol. 46(1), pages 253-284, February.

    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. Marco Castaneda & Dino Falaschetti, 2008. "Does a Hospital’s Profit Status Affect its Operational Scope?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 33(2), pages 129-159, September.
    2. Jill R. Horwitz & Austin Nichols, 2007. "What Do Nonprofits Maximize? Nonprofit Hospital Service Provision and Market Ownership Mix," NBER Working Papers 13246, National Bureau of Economic Research, Inc.
    3. Horwitz, Jill R. & Nichols, Austin, 2009. "Hospital ownership and medical services: Market mix, spillover effects, and nonprofit objectives," Journal of Health Economics, Elsevier, vol. 28(5), pages 924-937, September.
    4. Silverman, Elaine & Skinner, Jonathan, 2004. "Medicare upcoding and hospital ownership," Journal of Health Economics, Elsevier, vol. 23(2), pages 369-389, March.
    5. Chang, Hsihui & Cheng, Mei-Ai & Das, Somnath, 2004. "Hospital ownership and operating efficiency: Evidence from Taiwan," European Journal of Operational Research, Elsevier, vol. 159(2), pages 513-527, December.
    6. Janet Currie & Mehdi Farsi & W. Bentley Macleod, 2005. "Cut to the Bone? Hospital Takeovers and Nurse Employment Contracts," ILR Review, Cornell University, ILR School, vol. 58(3), pages 471-493, April.
    7. Huckman, Robert S., 2006. "Hospital integration and vertical consolidation: An analysis of acquisitions in New York State," Journal of Health Economics, Elsevier, vol. 25(1), pages 58-80, January.
    8. Daniel Kessler & Mark McClellan, 2001. "The Effects of Hospital Ownership on Medical Productivity," NBER Working Papers 8537, National Bureau of Economic Research, Inc.
    9. Charles Hegji, 2006. "Correlates of hospital quality: a preliminary study," Economics Bulletin, AccessEcon, vol. 9(4), pages 1-13.
    10. Andrew E. Clark & Carine Milcent, 2008. "Keynesian hospitals? Public employment and political pressure," PSE Working Papers halshs-00586792, HAL.
    11. Ghatak, Maitreesh & Mueller, Hannes, 2011. "Thanks for nothing? Not-for-profits and motivated agents," Journal of Public Economics, Elsevier, vol. 95(1-2), pages 94-105, February.
    12. Jill R. Horwitz, 2005. "Does Corporate Ownership Matter? Service Provision in the Hospital Industry," NBER Working Papers 11376, National Bureau of Economic Research, Inc.
    13. Shen, Yu-Chu, 2003. "The effect of financial pressure on the quality of care in hospitals," Journal of Health Economics, Elsevier, vol. 22(2), pages 243-269, March.
    14. Clark, Andrew E. & Milcent, Carine, 2011. "Public employment and political pressure: The case of French hospitals," Journal of Health Economics, Elsevier, vol. 30(5), pages 1103-1112.
    15. Shen, Yu-Chu, 2002. "The effect of hospital ownership choice on patient outcomes after treatment for acute myocardial infarction," Journal of Health Economics, Elsevier, vol. 21(5), pages 901-922, September.
    16. Ettner, Susan L. & Hermann, Richard C., 2001. "The role of profit status under imperfect information: evidence from the treatment patterns of elderly Medicare beneficiaries hospitalized for psychiatric diagnoses," Journal of Health Economics, Elsevier, vol. 20(1), pages 23-49, January.
    17. Gentry, William M., 2002. "Debt, investment and endowment accumulation: the case of not-for-profit hospitals," Journal of Health Economics, Elsevier, vol. 21(5), pages 845-872, September.
    18. Paul Gertler & Jennifer Kuan, 2009. "Does It Matter Who Your Buyer Is? The Role of Nonprofit Mission in the Market for Corporate Control of Hospitals," Journal of Law and Economics, University of Chicago Press, vol. 52(2), pages 295-306, May.
    19. Albert H. Choi, 2015. "Non-Profit Status and Relational Sanctions: Commitment to Quality through Repeat Interactions and Organizational Choice," Journal of Law and Economics, University of Chicago Press, vol. 58(4).
    20. Marianne Bertrand & Kevin F. Hallock & Richard Arnould, 2005. "Does Managed Care Change the Management of Nonprofit Hospitals? Evidence from the Executive Labor Market," ILR Review, Cornell University, ILR School, vol. 58(3), pages 494-514, April.

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

    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:nbr:nberwo:18286. 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/nberrus.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.