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Exogenous Exits, Market Structure, and Equilibrium Contracts in Health Care

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  • Natalia Serna

Abstract

This paper quantifies the causal effects of exogenous health insurer exits on contract structure and health care market outcomes, proposing market concentration as a likely mechanism for these effects. Leveraging the termination of the largest health insurer in Colombia, I find that the use of fee-for-service contracts increased after the termination relative to capitation contracts. Treatment effects are larger in markets with higher provider than insurer concentration at baseline. Results suggest that equilibrium contracts place the financial risk on insurers in markets where providers have higher bargaining leverage.

Suggested Citation

  • Natalia Serna, 2025. "Exogenous Exits, Market Structure, and Equilibrium Contracts in Health Care," American Economic Review: Insights, American Economic Association, vol. 7(3), pages 325-339, September.
    • Handle: RePEc:aea:aerins:v:7:y:2025:i:3:p:325-39
    DOI: 10.1257/aeri.20240155
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    More about this item

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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