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Do Health Insurers Possess Market Power?

Author

Listed:
  • Laurie J. Bates

    () (Professor of Economics, Department of Economics, Bryant University, Smithfield, RI 02917, USA)

  • James I. Hilliard

    () (Assistant Professor of Risk Management and Insurance, Department of Insurance, Legal Studies and Real Estate, Terry College of Business, University of Georgia, 206 Brooks Hall, Athens, GA 30602, USA)

  • Rexford E. Santerre

    () (Professor of Finance and Healthcare Management, Department of Finance, University of Connecticut, School of Business, 2100 Hillside Road Unit 1041, Storrs, CT 06269-1041, USA; corresponding author)

Abstract

During the 2009–2010 health care reform debates, many policy makers presumed that a lack of competition in the U.S. health insurance industry had resulted in greater levels of uninsurance. However, such a presumption has no basis in current research. This study, with a panel data set of the 50 states and the District of Columbia over the years 2001–2007, examines how health-insurer market concentration at the state level influences the percentage of the population with either individually purchased or employer-sponsored private health insurance. Two-stage least squares estimates are derived using a lagged measure of health-insurer concentration as an instrument. Results suggest that health insurers exercise market power on the seller side of the health insurance marketplace, but the restriction of output is limited to the individually purchased insurance market segment.

Suggested Citation

  • Laurie J. Bates & James I. Hilliard & Rexford E. Santerre, 2012. "Do Health Insurers Possess Market Power?," Southern Economic Journal, Southern Economic Association, vol. 78(4), pages 1289-1304, April.
  • Handle: RePEc:sej:ancoec:v:78:4:y:2012:p:1289-1304
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    File URL: http://dx.doi.org/10.4284/0038-4038-78.4.1289
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    Citations

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    Cited by:

    1. Pau Olivella & Fred Schroyen, 2014. "Multidimensional Screening in a Monopolistic Insurance Market," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 39(1), pages 90-130, March.
    2. Daniel McFadden & Carlos Noton & Pau Olivella, 2015. "Minimum coverage regulation in insurance markets," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 6(3), pages 247-278, August.
    3. Sandra Rodriguez A., 2015. "Poder de monopsonio en el mercado de aseguramiento en salud en Colombia," REVISTA DE ECONOMÍA DEL CARIBE 014779, UNIVERSIDAD DEL NORTE.
    4. 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.

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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