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Narrow Networks on the Health Insurance Exchanges: What Do They Look Like and How Do They Affect Pricing? A Case Study of Texas

Author

Listed:
  • Leemore Dafny
  • Igal Hendel
  • Nathan Wilson

Abstract

The Affordable Care Act has engendered significant changes in the design of health insurance products. We examine the "narrowness" of hospital networks affiliated with plans offered in the first year of the marketplaces. Using data from Texas, we find limited evidence of a tight link between pricing and a simple measure of network breadth, or a more complex measure of network value derived from a logit model of hospital choice. The state's largest insurer priced its narrow networks at a fairly constant discount relative to its broad networks, notwithstanding significant variation in its broad-narrow gap across geographic markets in Texas.

Suggested Citation

  • Leemore Dafny & Igal Hendel & Nathan Wilson, 2015. "Narrow Networks on the Health Insurance Exchanges: What Do They Look Like and How Do They Affect Pricing? A Case Study of Texas," American Economic Review, American Economic Association, vol. 105(5), pages 110-114, May.
    • Handle: RePEc:aea:aecrev:v:105:y:2015:i:5:p:110-14
    Note: DOI: 10.1257/aer.p20151081
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    References listed on IDEAS

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    1. Leemore Dafny, 2009. "Estimation and Identification of Merger Effects: An Application to Hospital Mergers," Journal of Law and Economics, University of Chicago Press, vol. 52(3), pages 523-550, August.
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    Cited by:

    1. Drake, Coleman, 2019. "What are consumers willing to pay for a broad network health plan?: Evidence from covered California," Journal of Health Economics, Elsevier, vol. 65(C), pages 63-77.
    2. Kate Ho & Robin S. Lee, 2019. "Equilibrium Provider Networks: Bargaining and Exclusion in Health Care Markets," American Economic Review, American Economic Association, vol. 109(2), pages 473-522, February.
    3. Nicholas Tilipman, 2022. "Employer Incentives and Distortions in Health Insurance Design: Implications for Welfare and Costs," American Economic Review, American Economic Association, vol. 112(3), pages 998-1037, March.
    4. Eli Liebman & Matthew T. Panhans, 2021. "Why do narrow network plans cost less?," Health Economics, John Wiley & Sons, Ltd., vol. 30(10), pages 2437-2451, September.
    5. Giancarlo Buitrago & Paul Andrés Rodríguez-Lesmes & Natalia Serna & Marcos Vera-Hernández, 2023. "The Role of Hospital Networks in Individual Mortality," Documentos de Trabajo 20945, Universidad del Rosario.
    6. Martin Gaynor & Kate Ho & Robert J. Town, 2015. "The Industrial Organization of Health-Care Markets," Journal of Economic Literature, American Economic Association, vol. 53(2), pages 235-284, June.
    7. Daniel Hosken & David Schmidt & Matthew C. Weinberg, 2020. "Any Willing Provider and Negotiated Retail Pharmaceutical Prices," Journal of Industrial Economics, Wiley Blackwell, vol. 68(1), pages 1-39, March.

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    More about this item

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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