IDEAS home Printed from
   My bibliography  Save this article

Hospital prices and market structure in the hospital and insurance industries


  • Moriya, Asako S.
  • Vogt, William B.
  • Gaynor, Martin


There has been substantial consolidation among health insurers and hospitals, recently, raising questions about the effects of this consolidation on the exercise of market power. We analyze the relationship between insurer and hospital market concentration and the prices of hospital services. We use a national US dataset containing transaction prices for health care services for over 11 million privately insured Americans. Using three years of panel data, we estimate how insurer and hospital market concentration are related to hospital prices, while controlling for unobserved market effects. We find that increases in insurance market concentration are significantly associated with decreases in hospital prices, whereas increases in hospital concentration are non-significantly associated with increases in prices. A hypothetical merger between two of five equally sized insurers is estimated to decrease hospital prices by 6.7%.

Suggested Citation

  • Moriya, Asako S. & Vogt, William B. & Gaynor, Martin, 2010. "Hospital prices and market structure in the hospital and insurance industries," Health Economics, Policy and Law, Cambridge University Press, vol. 5(04), pages 459-479, October.
  • Handle: RePEc:cup:hecopl:v:5:y:2010:i:04:p:459-479_00

    Download full text from publisher

    File URL:
    File Function: link to article abstract page
    Download Restriction: no

    References listed on IDEAS

    1. Or, Zeynep & Cases, Chantal & Lisac, Melanie & Vrangbæk, Karsten & Winblad, Ulrika & Bevan, Gwyn, 2010. "Are health problems systemic? Politics of access and choice under Beveridge and Bismarck systems," Health Economics, Policy and Law, Cambridge University Press, vol. 5(03), pages 269-293, July.
    2. Dourgnon, Paul & Naiditch, Michel, 2010. "The preferred doctor scheme: A political reading of a French experiment of Gate-keeping," Health Policy, Elsevier, vol. 94(2), pages 129-134, February.
    3. P.C. Smith, 2002. "Measuring health system performance," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 3(3), pages 145-148, September.
    4. Carine Franc & Marc Perronnin & Aurélie Pierre, 2008. "Private Supplementary Health Insurance: Retirees' Demand," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 33(4), pages 610-626, October.
    5. Florence Jusot & Michel Grignon & Paul Dourgnon, 2007. "Psychosocial resources and social health inequalities in France: Exploratory findings from a general population survey," Working Papers DT6, IRDES institut for research and information in health economics, revised Nov 2007.
    6. Nicolas Sirven & Brigitte Santos-Eggimann & Jacques Spagnoli, 2008. "Comparability of Health Care Responsiveness in Europe using anchoring vignettes from SHARE," Working Papers DT15, IRDES institut for research and information in health economics, revised Sep 2008.
    7. Thierry Debrand & Aurélie Pierre & Caroline Allonier & Veronique Lucas-Gabrielli, 2008. "Health status, Neighbourhood effects and Public choice: Evidence from France," Working Papers DT11, IRDES institut for research and information in health economics, revised Jun 2008.
    8. repec:dau:papers:123456789/7004 is not listed on IDEAS
    9. Thierry Debrand & Pascale Lengagne, 2008. "Working Conditions and Health of European Older Workers," Working Papers DT8, IRDES institut for research and information in health economics, revised Feb 2008.
    10. Didier Blanchet & Thierry Debrand, 2008. "The sooner, the better? Analyzing preferences for early retirement in European countries," Working Papers DT13, IRDES institut for research and information in health economics, revised Jul 2008.
    11. Michel Grignon & Bidénam Kambia-Chopin, 2009. "Income and the Demand for Complementary Health Insurance in France," Working Papers DT24, IRDES institut for research and information in health economics, revised Apr 2009.
    12. Zeynep Or & Florence Jusot & Engin Yilmaz, 2008. "Impact of health care system on socioeconomic inequalities in doctor use," Working Papers DT17, IRDES institut for research and information in health economics, revised Sep 2008.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. 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.
    2. 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.
    3. Douven, Rudy C.H.M. & Schut, Frederik T., 2011. "Pricing behaviour of nonprofit insurers in a weakly competitive social health insurance market," Journal of Health Economics, Elsevier, vol. 30(2), pages 439-449, March.
    4. Andrew Stocking & James Baumgardner & Melinda Buntin & Anna Cook, 2014. "Examining the Number of Competitors and the Cost of Medicare Part D: Working Paper 2014-04," Working Papers 45553, Congressional Budget Office.
    5. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, Elsevier.
    6. Brunt, Christopher S. & Bowblis, John R., 2014. "Health insurer market power and primary care consolidation," Economics Letters, Elsevier, vol. 125(1), pages 61-65.
    7. Leemore Dafny & Mark Duggan & Subramaniam Ramanarayanan, 2012. "Paying a Premium on Your Premium? Consolidation in the US Health Insurance Industry," American Economic Review, American Economic Association, vol. 102(2), pages 1161-1185, April.
    8. Donald Alexander & Jon Neill, 2015. "The Impact of Market Share on Health Insurance Premiums," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 43(4), pages 477-488, December.
    9. 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.
    10. Scott E. Harrington, 2011. "The Continuing Debate on Health Insurance Reform," NFI Policy Briefs 2011-PB-09, Indiana State University, Scott College of Business, Networks Financial Institute.
    11. Pelech, Daria, 2017. "Dropped out or pushed out? Insurance market exit and provider market power in Medicare Advantage," Journal of Health Economics, Elsevier, vol. 51(C), pages 98-112.
    12. Juan Esteban Carranza & Álvaro J. Riascos & Natalia Serna, 2017. "Market Power, Contracts and Outcomes: The Case of Patients with Long-Term Diseases in the Colombian Health Care System," DOCUMENTOS DE TRABAJO QUANTIL 015283, QUANTIL.
    13. Kate Ho & Robin S. Lee, 2017. "Insurer Competition in Health Care Markets," Econometrica, Econometric Society, vol. 85, pages 379-417, March.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:hecopl:v:5:y:2010:i:04:p:459-479_00. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keith Waters). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.