IDEAS home Printed from https://ideas.repec.org/a/taf/applec/44y2012i10p1201-1207.html
   My bibliography  Save this article

Competition and the cost of health care

Author

Listed:
  • Ritesh Banerjee
  • Ethan Cohen-Cole

Abstract

In this article, we investigate pricing power in the US health care market. Using new data on state-level health care cost, as well as combining public and previously unused data on concentration among insurers and providers, we find a link between the market concentration of insurance carriers and total costs. We also present suggestive evidence that concentration in the hospital sector does not relate to total costs; however, it may lead to decreased health care access. The implications are large: we find that a 1 percentage point increase in the average market share of the largest five carriers in a market leads to a 10% increase in expenditures.

Suggested Citation

  • Ritesh Banerjee & Ethan Cohen-Cole, 2012. "Competition and the cost of health care," Applied Economics, Taylor & Francis Journals, vol. 44(10), pages 1201-1207, April.
    • Handle: RePEc:taf:applec:44:y:2012:i:10:p:1201-1207
    DOI: 10.1080/00036846.2010.539537
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2010.539537
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036846.2010.539537?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Vaithianathan, Rhema, 2006. "Health insurance and imperfect competition in the health care market," Journal of Health Economics, Elsevier, vol. 25(6), pages 1193-1202, November.
    2. Patricia M. Danzon & Mark V. Pauly, 2002. "Health Insurance and the Growth in Pharmaceutical Expenditures," Journal of Law and Economics, University of Chicago Press, vol. 45(S2), pages 587-613.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Frédéric Gannon & Vincent Touzé, 2006. "Insurance and Optimal Growth," Post-Print halshs-00085181, HAL.
    2. Kemnitz Alexander, 2013. "A Simple Model of Health Insurance Competition," German Economic Review, De Gruyter, vol. 14(4), pages 432-448, December.
    3. Patricia M. Danzon & Eric L. Keuffel, 2014. "Regulation of the Pharmaceutical-Biotechnology Industry," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 407-484, National Bureau of Economic Research, Inc.
    4. Zhou, Wenhui & Wan, Qiang & Zhang, Ren-Qian, 2017. "Choosing among hospitals in the subsidized health insurance system of China: A sequential game approach," European Journal of Operational Research, Elsevier, vol. 257(2), pages 568-585.
    5. Cremer, Helmuth & Lozachmeur, Jean-Marie, 2022. "Coinsurance vs. co-payments: Reimbursement rules for a monopolistic medical product with competitive health insurers," Journal of Health Economics, Elsevier, vol. 84(C).
    6. Bardey, David & Cremer, Helmuth & Lozachmeur, Jean-Marie, 2016. "The design of insurance coverage for medical products under imperfect competition," Journal of Public Economics, Elsevier, vol. 137(C), pages 28-37.
    7. Sorek Gilad & Randolph Beard T., 2018. "Public Health Insurance with Monopolistically Competitive Providers and Optional Spot Sales," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 18(1), pages 1-10, January.
    8. repec:spo:wpecon:info:hdl:2441/4422 is not listed on IDEAS
    9. Jorgen Lauridsen & Mariluz Sánchez & Mickael Bech, 2010. "Public pharmaceutical expenditure: identification of spatial effects," Journal of Geographical Systems, Springer, vol. 12(2), pages 175-188, June.
    10. Nell, Martin & Richter, Andreas & Schiller, Jörg, 2009. "When prices hardly matter: Incomplete insurance contracts and markets for repair goods," European Economic Review, Elsevier, vol. 53(3), pages 343-354, April.
    11. Ernst R. Berndt & Joseph P. Newhouse, 2010. "Pricing and Reimbursement in U.S. Pharmaceutical Markets," NBER Working Papers 16297, National Bureau of Economic Research, Inc.
    12. Dunn, Abe, 2010. "The value of coverage in the medicare advantage insurance market," Journal of Health Economics, Elsevier, vol. 29(6), pages 839-855, December.
    13. repec:hal:spmain:info:hdl:2441/4422 is not listed on IDEAS
    14. repec:dau:papers:123456789/15235 is not listed on IDEAS
    15. Moshe Levy & Adi Rizansky Nir, 2014. "The Pricing of Breakthrough Drugs: Theory and Policy Implications," PLOS ONE, Public Library of Science, vol. 9(11), pages 1-12, November.
    16. Baker, Laurence C. & Bundorf, M. Kate & Kessler, Daniel P., 2015. "Does health plan generosity enhance hospital market power?," Journal of Health Economics, Elsevier, vol. 44(C), pages 54-62.
    17. William S. Comanor & Stuart O. Schweitzer, 2007. "Determinants of drug prices and expenditures," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(4-5), pages 357-370.
    18. Chiara Bonassi & Fabio Pammolli & Massimo Riccaboni & Nicola Carmine Salerno, 2007. "Regolazione, innovazione e ciclo di vita dei prodotti - per una riforma del pricing al lancio e della governance della spesa nella farmaceutica pubblica," Working Papers CERM 02-2007, Competitività, Regole, Mercati (CERM).
    19. Kyle, Margaret K., 2022. "Incentives for pharmaceutical innovation: What’s working, what’s lacking," International Journal of Industrial Organization, Elsevier, vol. 84(C).
    20. Bardey, D. & Bommier, A. & Jullien, B., 2010. "Retail price regulation and innovation: Reference pricing in the pharmaceutical industry," Journal of Health Economics, Elsevier, vol. 29(2), pages 303-316, March.
    21. Brigitte Dormont & Mathilde Péron, 2016. "Does Health Insurance Encourage the Rise in Medical Prices? A Test on Balance Billing in France," Health Economics, John Wiley & Sons, Ltd., vol. 25(9), pages 1073-1089, September.
    22. Dormont, B. & Péron, M., 2015. "Does health insurance encourage the rise in medical prices?," Health, Econometrics and Data Group (HEDG) Working Papers 15/16, HEDG, c/o Department of Economics, University of York.
    23. Melissa Newham & Marica Valente, 2022. "The Cost of Influence: How Gifts to Physicians Shape Prescriptions and Drug Costs," Papers 2203.01778, arXiv.org, revised Apr 2023.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    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:taf:applec:44:y:2012:i:10:p:1201-1207. See general information about how to correct material in RePEc.

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.