Health insurance competition: The effect of group contracts
AbstractThe 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.
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Bibliographic InfoPaper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 152.
Date of creation: Jun 2010
Date of revision:
Other versions of this item:
- 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.
- Boone, Jan & Douven, Rudy & Droge, Carline & Mosca, Ilaria, 2010. "Health insurance competition: the effect of group contracts," CEPR Discussion Papers 7871, C.E.P.R. Discussion Papers.
- Boone, J. & Douven, R.C.M.H. & Droge, C. & Mosca, I., 2010. "Health Insurance Competition: The Effect of Group Contracts," Discussion Paper 2010-040, Tilburg University, Tilburg Law and Economic Center.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-18 (All new papers)
- NEP-COM-2010-06-18 (Industrial Competition)
- NEP-HEA-2010-06-18 (Health Economics)
- NEP-IAS-2010-06-18 (Insurance Economics)
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