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Data Impediments to Empirical Work on Health Insurance Markets

Author

Listed:
  • Dafny Leemore

    () (Northwestern University)

  • Dranove David

    () (Northwestern University)

  • Limbrock Frank

    () (Northwestern University)

  • Scott Morton Fiona

    () (Yale School of Management)

Abstract

We compare four datasets that researchers might use to study competition in the health insurance industry. We show that the two datasets most commonly used to estimate market concentration differ considerably from each other (both in levels and in changes over time), and reflect implausibly high volatility in market shares. By comparison, market share volatility is much lower in a private dataset gathered by a leading investment bank, and in state-level hospital discharge data. We also demonstrate that the outcome of regressions using these data vary considerably by the source used. We conclude that researchers should be cautious about using available data and recommend a new source be developed for public use.

Suggested Citation

  • Dafny Leemore & Dranove David & Limbrock Frank & Scott Morton Fiona, 2011. "Data Impediments to Empirical Work on Health Insurance Markets," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(2), pages 1-24, January.
  • Handle: RePEc:bpj:bejeap:v:11:y:2011:i:2:n:8
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    References listed on IDEAS

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    1. John A. List, 2006. "The Behavioralist Meets the Market: Measuring Social Preferences and Reputation Effects in Actual Transactions," Journal of Political Economy, University of Chicago Press, pages 1-37.
    2. Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
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    Cited by:

    1. Trish, Erin E. & Herring, Bradley J., 2015. "How do health insurer market concentration and bargaining power with hospitals affect health insurance premiums?," Journal of Health Economics, Elsevier, vol. 42(C), pages 104-114.
    2. Brunt, Christopher S. & Bowblis, John R., 2014. "Health insurer market power and primary care consolidation," Economics Letters, Elsevier, vol. 125(1), pages 61-65.
    3. Donald Alexander & Jon Neill, 2015. "The Impact of Market Share on Health Insurance Premiums," Atlantic Economic Journal, Springer;International Atlantic Economic Society, pages 477-488.
    4. Jeffrey Clemens & Joshua D. Gottlieb, 2017. "In the Shadow of a Giant: Medicare’s Influence on Private Physician Payments," Journal of Political Economy, University of Chicago Press, vol. 125(1), pages 1-39.
    5. Cooper, Zack & Craig, Stuart & Gaynor, Martin & Van Reenen, John, 2015. "The price ain’t right? hospital prices and healthspending on the privately insured," LSE Research Online Documents on Economics 66059, London School of Economics and Political Science, LSE Library.
    6. Leemore Dafny & Subramaniam Ramanarayanan, 2012. "Does it Matter if Your Health Insurer is For-Profit? Effects of Ownership on Premiums, Insurance Coverage, and Medical Spending," NBER Working Papers 18286, National Bureau of Economic Research, Inc.
    7. H. Frech & Christopher Whaley & Benjamin Handel & Liora Bowers & Carol Simon & Richard Scheffler, 2015. "Market Power, Transactions Costs, and the Entry of Accountable Care Organizations in Health Care," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(2), pages 167-193, September.

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