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The Impact of Market Share on Health Insurance Premiums

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  • Donald Alexander
  • Jon Neill

Abstract

It is usually argued that market concentration leads to higher prices. This well-known proposition has led to concern about the level of concentration in state health-insurance markets, since the largest insurer in many states has a market share greater than 50 %. Moreover, the data compiled by the American Medical Association indicates that insurance markets have become more concentrated over the last ten years. Thus, some have suggested that health insurance premiums would decrease significantly if state markets were made more competitive. This paper explores that proposition through a computational model and an empirical analysis of the relationship between the market share of the largest firm in a state and the average health insurance premium in that state. Copyright International Atlantic Economic Society 2015

Suggested Citation

  • Donald Alexander & Jon Neill, 2015. "The Impact of Market Share on Health Insurance Premiums," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(4), pages 477-488, December.
    • Handle: RePEc:kap:atlecj:v:43:y:2015:i:4:p:477-488
    DOI: 10.1007/s11293-015-9471-5
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    References listed on IDEAS

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    Cited by:

    1. Josh Matti, 2020. "Reaching for the Stars: Spatial Competition and Consumer Reviews," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 48(3), pages 339-353, September.

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    More about this item

    Keywords

    Market share; Health insurance premiums; Competition; I11; L11; L13; L30;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General

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