Advanced Search
MyIDEAS: Login to save this article or follow this journal

Are Health Insurance Markets Competitive?

Contents:

Author Info

  • Leemore S. Dafny
Registered author(s):

    Abstract

    To gauge the competitiveness of the group health insurance industry, I investigate whether health insurers charge higher premiums, ceteris paribus, to more profitable firms. Such "direct price discrimination" is feasible only in imperfectly competitive settings. Using a proprietary national database of health plans offered by a sample of large, multisite firms from 1998-2005, I find firms with positive profit shocks subsequently face higher premium growth, even for the same health plans. Moreover, within a given firm, those sites located in concentrated insurance markets experience the greatest premium increases. The findings suggest health care insurers are exercising market power in an increasing number of geographic markets. (JEL G22, I11, I18, L11, L25)

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.100.4.1399
    Download Restriction: no

    File URL: http://www.aeaweb.org/aer/data/sept2010/20080356_data.zip
    Download Restriction: no

    File URL: http://www.aeaweb.org/aer/data/sept2010/20080356_app.pdf
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.

    Bibliographic Info

    Article provided by American Economic Association in its journal American Economic Review.

    Volume (Year): 100 (2010)
    Issue (Month): 4 (September)
    Pages: 1399-1431

    as in new window
    Handle: RePEc:aea:aecrev:v:100:y:2010:i:4:p:1399-1431

    Note: DOI: 10.1257/aer.100.4.1399
    Contact details of provider:
    Email:
    Web page: https://www.aeaweb.org/aer/
    More information through EDIRC

    Order Information:
    Web: https://www.aeaweb.org/subscribe.html

    Related research

    Keywords:

    Find related papers by JEL classification:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. David Dranove & Anne Gron & Michael J. Mazzeo, 2003. "Differentiation and Competition in HMO Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 51(4), pages 433-454, December.
    2. Borenstein, Severin & Farrell, Joseph, 2006. "Do Investors Forecast Fat Firms? Evidence from the Gold Mining Industry," Competition Policy Center, Working Paper Series qt4h02v1jp, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
    3. Mark Duggan, 2002. "Does Contracting Out Increase the Efficiency of Government Programs? Evidence from Medicaid HMOs," NBER Working Papers 9091, National Bureau of Economic Research, Inc.
    4. Baltagi, Badi H. & Wu, Ping X., 1999. "Unequally Spaced Panel Data Regressions With Ar(1) Disturbances," Econometric Theory, Cambridge University Press, vol. 15(06), pages 814-823, December.
    5. Gruber, Jonathan & Washington, Ebonya, 2005. "Subsidies to employee health insurance premiums and the health insurance market," Journal of Health Economics, Elsevier, vol. 24(2), pages 253-276, 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 in new window

    Cited by:
    1. Martin Gaynor & Robert J. Town, 2011. "Competition in Health Care Markets," NBER Working Papers 17208, National Bureau of Economic Research, Inc.
    2. Martin B. Hackmann & Jonathan T. Kolstad & Amanda E. Kowalski, 2013. "Adverse Selection and an Individual Mandate: When Theory Meets Practice," Cowles Foundation Discussion Papers 1899, Cowles Foundation for Research in Economics, Yale University.
    3. Andrei Barbos & Yi Deng, 2013. "The Impact of a Public Option in the Health Insurance Market," Working Papers 0813, University of South Florida, Department of Economics.
    4. Bijlsma, M. & Boone, J. & Zwart, G., 2011. "Competition Leverage: How the Demand Side Affects Optimal Risk Adjustment," Discussion Paper 2011-071, Tilburg University, Center for Economic Research.
    5. Keith M. Marzilli Ericson & Amanda Starc, 2012. "Pricing Regulation and Imperfect Competition on the Massachusetts Health Insurance Exchange," NBER Working Papers 18089, National Bureau of Economic Research, Inc.
    6. Lagerlöf, Johan N. M. & Schottmüller, Christoph, 2013. "Facilitating Consumer Learning in Insurance Markets—What Are the Welfare Effects?," CEPR Discussion Papers 9753, C.E.P.R. Discussion Papers.
    7. Normann Lorenz, 2013. "Adverse selection and risk adjustment under imperfect competition," Research Papers in Economics 2013-05, University of Trier, Department of Economics.
    8. Lagerlöf, Johan N. M. & Schottmüller, Christoph, 2013. "Monopoly Insurance with Endogenous Information," CEPR Discussion Papers 9774, C.E.P.R. Discussion Papers.
    9. Miller, Amalia R. & Eibner, Christine & Gresenz, Carole Roan, 2013. "Financing of employer sponsored health insurance plans before and after health reform: What consumers don’t know won’t hurt them?," International Review of Law and Economics, Elsevier, vol. 36(C), pages 36-47.
    10. Jason Allen & Robert Clark & Jean-François Houde, 2012. "Price Negotiation in Differentiated Products Markets: Evidence from the Canadian Mortgage Market," Working Papers 12-30, Bank of Canada.
    11. Jason Allen & Robert Clark & Jean-François Houde, 2014. "Search Frictions and Market Power in Negotiated Price Markets," NBER Working Papers 19883, National Bureau of Economic Research, Inc.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:100:y:2010:i:4:p:1399-1431. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Voros) or (Michael P. Albert).

    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 references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.