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Competition in Health Insurance Markets

Author

Listed:
  • Martin Gaynor
  • Amanda Starc

Abstract

The United States relies primarily on private health insurance markets, yet these markets are highly concentrated and becoming more so over time. We document concentration across commercial, Medicare Advantage, and Medicaid markets. We then examine how asymmetric information—particularly adverse selection—interacts with market power to shape premiums, plan design, and consumer welfare. Empirical evidence confirms that insurer consolidation raises premiums. We discuss how antitrust enforcement, risk adjustment, regulation, and informational interventions shape competition and consumer welfare in these markets.

Suggested Citation

  • Martin Gaynor & Amanda Starc, 2026. "Competition in Health Insurance Markets," Journal of Economic Perspectives, American Economic Association, vol. 40(2), pages 17-42, Spring.
    • Handle: RePEc:aea:jecper:v:40:y:2026:i:2:p:17-42
    DOI: 10.1257/jep.20251459
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    More about this item

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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