Health Insurance Competition: The Effect of Group Contracts
AbstractIn countries like the US and the Netherlands health insurance is provided by private firms. These private firms can offer both individual and group contracts. The strategic and welfare implications of such group contracts are not well understood. Using a Dutch data set of about 700 group health insurance contracts over the period 2007-2008, we estimate a model to determine which factors explain the price of group contracts. 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 (if any) a larger discount than other groups. A simple Hotelling model, however, does explain our empirical results.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2010-55.
Date of creation: 2010
Date of revision:
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Web page: http://center.uvt.nl
health insurance; health-plan choice; managed competition;
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 2010-040, Tilburg University, Tilburg Law and Economic Center.
- Jan Boone & C. Droge & I. Mosca, 2010. "Health insurance competition: The effect of group contracts," CPB Discussion Paper 152, CPB Netherlands Bureau for Economic Policy Analysis.
- 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.
- 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-2010-08-21 (All new papers)
- NEP-COM-2010-08-21 (Industrial Competition)
- NEP-HEA-2010-08-21 (Health Economics)
- NEP-IAS-2010-08-21 (Insurance Economics)
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