Skip to main content
×
Home
    • Aa
    • Aa
  • Get access
    Check if you have access via personal or institutional login
  • Cited by 19
  • Cited by
    This article has been cited by the following publications. This list is generated based on data provided by CrossRef.

    Krinsky, Sam Ryan, Andrew M. Mijanovich, Tod and Blustein, Jan 2016. Variation in Payment Rates under Medicare's Inpatient Prospective Payment System. Health Services Research,


    Alexander, Donald L. and Neill, Jon 2015. The Impact of Market Share on Health Insurance Premiums. Atlantic Economic Journal, Vol. 43, Issue. 4, p. 477.


    Gaynor, Martin Ho, Kate and Town, Robert J. 2015. The Industrial Organization of Health-Care Markets†. Journal of Economic Literature, Vol. 53, Issue. 2, p. 235.


    Sheaff, Rod Charles, Nigel Mahon, Ann Chambers, Naomi Morando, Verdiana Exworthy, Mark Byng, Richard Mannion, Russell and Llewellyn, Sue 2015. NHS commissioning practice and health system governance: a mixed-methods realistic evaluation. Health Services and Delivery Research, Vol. 3, Issue. 10, p. 1.


    Trish, Erin E. and Herring, Bradley J. 2015. How do health insurer market concentration and bargaining power with hospitals affect health insurance premiums?. Journal of Health Economics, Vol. 42, p. 104.


    Bowblis, John R. 2014. Nursing home prices and market structure: the effect of assisted living industry expansion. Health Economics, Policy and Law, Vol. 9, Issue. 01, p. 95.


    Brunt, Christopher S. and Bowblis, John R. 2014. Health insurer market power and primary care consolidation. Economics Letters, Vol. 125, Issue. 1, p. 61.


    Chen, Wen and Shi, Bo 2014. How Should the Hospital Assign Service Volume to Private Payers Optimally?. IEEE Transactions on Engineering Management, Vol. 61, Issue. 4, p. 646.


    Fournier, Gary M. 2014. Can Empirical Demand Models Assist in CON Comparative Reviews? A Case Study in Florida. Southern Economic Journal, Vol. 81, Issue. 1, p. 68.


    Lorenzoni, Luca Belloni, Annalisa and Sassi, Franco 2014. Health-care expenditure and health policy in the USA versus other high-spending OECD countries. The Lancet, Vol. 384, Issue. 9937, p. 83.


    McKellar, Michael R. Naimer, Sivia Landrum, Mary B. Gibson, Teresa B. Chandra, Amitabh and Chernew, Michael 2014. Insurer Market Structure and Variation in Commercial Health Care Spending. Health Services Research, Vol. 49, Issue. 3, p. 878.


    Santerre, R.E. 2014. Encyclopedia of Health Economics.


    Harrington, Scott E. 2013. Medical Loss Ratio Regulation under the Affordable Care Act. Inquiry, Vol. 50, Issue. 1, p. 9.


    Bates, Laurie J. Hilliard, James I. and Santerre, Rexford E. 2012. Do Health Insurers Possess Market Power?. Southern Economic Journal, Vol. 78, Issue. 4, p. 1289.


    Dafny, Leemore Duggan, Mark and Ramanarayanan, Subramaniam 2012. Paying a Premium on Your Premium? Consolidation in the US Health Insurance Industry. American Economic Review, Vol. 102, Issue. 2, p. 1161.


    Frakt, Austin B Pizer, Steven D and Feldman, Roger 2012. The Effects of Market Structure and Payment Rate on the Entry of Private Health Plans into the Medicare Market. Inquiry, Vol. 49, Issue. 1, p. 15.


    Douven, Rudy C.H.M. and Schut, Frederik T. 2011. Pricing behaviour of nonprofit insurers in a weakly competitive social health insurance market. Journal of Health Economics, Vol. 30, Issue. 2, p. 439.


    FRAKT, AUSTIN B. 2011. How Much Do Hospitals Cost Shift? A Review of the Evidence. Milbank Quarterly, Vol. 89, Issue. 1, p. 90.


    Gaynor, Martin and Town, Robert J. 2011.


    ×

Hospital prices and market structure in the hospital and insurance industries

  • Asako S. Moriya (a1), William B. Vogt (a2) and Martin Gaynor (a3)
  • DOI: http://dx.doi.org/10.1017/S1744133110000083
  • Published online: 01 October 2010
Abstract
Abstract

There has been substantial consolidation among health insurers and hospitals, recently, raising questions about the effects of this consolidation on the exercise of market power. We analyze the relationship between insurer and hospital market concentration and the prices of hospital services. We use a national US dataset containing transaction prices for health care services for over 11 million privately insured Americans. Using three years of panel data, we estimate how insurer and hospital market concentration are related to hospital prices, while controlling for unobserved market effects. We find that increases in insurance market concentration are significantly associated with decreases in hospital prices, whereas increases in hospital concentration are non-significantly associated with increases in prices. A hypothetical merger between two of five equally sized insurers is estimated to decrease hospital prices by 6.7%.

Copyright
Corresponding author
*Correspondence to: Asako S. Moriya, Heinz College, and Tepper School of Business, Carnegie Mellon University, Pittsburgh, PA, USA. Email: asako.moriya@gmail.com
Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

K. W. Adamache F. A. Sloan (1983), ‘Competition between non-profit and for-profit health insurers’, Journal of Health Economics, 2(3): 225243.

A. Bamezai , G. A. Melnick , J. Mann J. Zwanziger (2003), ‘Hospital selective contracting in the absence of consumer choice: what can we learn from Medi-Cal?’, Journal of Policy Analysis and Management, 22(1): 6584.

M. Bertrand , E. Duflo S. Mullainathan (2004), ‘How much should we trust differences-in-differences estimates?’, Quarterly Journal of Economics, 119(1): 249275.

J. M. Brooks , A. Dor H. S. Wong (1997), ‘Hospital-insurer bargaining: an empirical investigation of appendectomy pricing’, Journal of Health Economics, 16(4): 417434.

C. S. Capps , D. Dranove M. A. Satterthwaite (2003), ‘Competition and market power in option demand markets’, Rand Journal of Economics, 34(4): 737763.

S. Chakravarty , M. Gaynor , S. Klepper W. B. Vogt (2006), ‘Does the profit motive make Jack nimble? Ownership form and the evolution of the US hospital industry’, Health Economics, 15(4): 345361.

R. A. Connor , R. D. Feldman B. E. Dowd (1998), ‘The effects of market concentration and horizontal mergers on hospital costs and prices’, International Journal of the Economics of Business, 5(2): 159180.

A. E. Cuellar P. J. Gertler (2003), ‘Trends in hospital consolidation: the formation of local systems’, Health Affairs, 22(6): 7787.

A. Dor , M. Grossman S. M. Koroukian (2004a), ‘Hospital transaction prices and managed-care discounting for selected medical technologies’, American Economic Review, 94(2): 352356.

D. Dranove R. Ludwick (1999), ‘Competition and pricing by nonprofit hospitals: a reassessment of Lynk’s analysis’, Journal of Health Economics, 18(1): 8798.

D. Dranove , M. Shanley W. D. White (1993), ‘Price and concentration in local hospital markets: the switch from patient-driven to payer-driven competition’, Journal of Law and Economics, 36(1): 179204.

B. Efron R. Tibshirani (1993), An Introduction to the Bootstrap, New York: Chapman & Hall.

R. Feldman W. Greenberg (1981), ‘The relation between the Blue Cross market share and the Blue Cross ‘discount’ on hospital charges’, Journal of Risk and Insurance, 48(2): 235246.

R. Feldman D. Wholey (2001), ‘Do HMOs have monopsony power?’, International Journal of Health Care Finance and Economics, 1(1): 722.

S. E. Foreman , J. A. Wilson R. M. Scheffler (1996), ‘Monopoly, monopsony, and contestability in health insurance: a study of Blue Cross plans’, Economic Inquiry, 34(4): 662677.

M. Gaynor W. B. Vogt (2000), ‘Antitrust and Competition in Health Care Markets’, in J. P. Newhouse and A. Culyer (eds), Handbook of Health Economics, Amsterdam: Elsevier, 14051487.

E. B. Keeler , G. Melnick J. Zwanziger (1999), ‘The changing effects of competition on non-profit and for-profit hospital pricing behavior’, Journal of Health Economics, 18(1): 6986.

D. P. Kessler M. B. McClellan (2000), ‘Is hospital competition socially wasteful?’, Quarterly Journal of Economics, 115(2): 577615.

W. J. Lynk (1995), ‘Nonprofit hospital mergers and the exercise of market power’, Journal of Law and Economics, 38(2): 437461.

W. J. Lynk L. R. Neumann (1999), ‘Price and profit’, Journal of Health Economics, 18(1): 99105.

G. Melnick E. Keeler (2007), ‘The effects of multi-hospital systems on hospital prices’, Journal of Health Economics, 26(2): 400413.

G. Melnick , J. Zwanziger , A. Bamezai R. Pattison (1992), ‘The effect of market structure and bargaining position on hospital prices’, Journal of Health Economics, 11(3): 217233.

M. Noether (1988), ‘Competition among hospitals’, Journal of Health Economics, 7(3): 259284.

J. Simpson R. Shin (1998), ‘Do nonprofit hospitals exercise market power?’, International Journal of the Economics of Business, 5(2): 141158.

A. T. Sorensen (2003), ‘Insurer-hospital bargaining: negotiated discounts in post-deregulation Connecticut’, Journal of Industrial Economics, 51(4): 469490.

M. Staten , W. Dunkelberg J. Umbeck (1987), ‘Market share and the illusion of power: can Blue Cross force hospitals to discount?’, Journal of Health Economics, 6(1): 4358.

M. Staten , W. Dunkelberg J. Umbeck (1988), ‘Market share/market power revisited, a new test for an old theory’, Journal of Health Economics, 7(1): 7383.

R. Town G. Vistnes (2001), ‘Hospital competition in HMO networks’, Journal of Health Economics, 20(4): 733753.

D. Wholey , R. Feldman J. B. Christianson (1995), ‘The effect of market structure on HMO premiums’, Journal of Health Economics, 14(1): 81105.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Health Economics, Policy and Law
  • ISSN: 1744-1331
  • EISSN: 1744-134X
  • URL: /core/journals/health-economics-policy-and-law
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×