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The effect of narrow provider networks on health care use

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  • Atwood, Alicia
  • Lo Sasso, Anthony T.

Abstract

Network design is an often overlooked aspect of health insurance contracts. Recent policy factors have resulted in narrower provider networks. We provide plausibly causal evidence on the effect of narrow network plans offered by a large national health insurance carrier in a major metropolitan market. Our econometric design exploits the fact that some firms offer a narrow network plan to their employees and some do not. Our results show that narrow network health plans lead to reductions in health care utilization and spending. We find evidence that narrow networks save money by selecting lower cost providers into the network.

Suggested Citation

  • Atwood, Alicia & Lo Sasso, Anthony T., 2016. "The effect of narrow provider networks on health care use," Journal of Health Economics, Elsevier, vol. 50(C), pages 86-98.
    • Handle: RePEc:eee:jhecon:v:50:y:2016:i:c:p:86-98
    DOI: 10.1016/j.jhealeco.2016.09.007
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    References listed on IDEAS

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    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. van den Broek-Altenburg, Eline M. & Atherly, Adam J., 2020. "The relation between selective contracting and healthcare expenditures in private health insurance plans in the United States," Health Policy, Elsevier, vol. 124(2), pages 174-182.
    3. 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.
    4. Higuera, Lucas & Carlin, Caroline S. & Dowd, Bryan, 2018. "Narrow provider networks and willingness to pay for continuity of care and network breadth," Journal of Health Economics, Elsevier, vol. 60(C), pages 90-97.
    5. Evan Gee & Craig Peters & Jeffrey M. Wilder, 2019. "The Year in Review: Economics at the Antitrust Division, 2018–2019," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(4), pages 537-550, December.
    6. 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.
    7. Brett Lissenden, 2019. "The effect of cancer diagnosis on switching health insurance in medicare," Health Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 339-349, March.
    8. 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.

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