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Market forces in healthcare insurance. The impact of healthcare reform on regulated competition revisited

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Listed:
  • Jacob Bikker
  • Jack Bekooij

Abstract

This paper investigates the impact of market forces on competitive behaviour and efficiency in healthcare by investigating the Dutch healthcare insurance reform in 2006. This reform replaced the dual system of public and private insurance with a single compulsory health insurance scheme, in which insurance providers compete for customers in a free market. We measure competition directly from either shifts in market shares, or developments in profits. Using formal tests we find that in each approach a structural break occurs after the reform: competition is significantly higher after 2006 than before. Several robustness tests confirm this outcome. Nevertheless, we find that the health insurance sector is still less competitive than the banking, manufacturing and service industries, and even less competitive than life insurance.

Suggested Citation

  • Jacob Bikker & Jack Bekooij, 2021. "Market forces in healthcare insurance. The impact of healthcare reform on regulated competition revisited," Working Papers 705, DNB.
    • Handle: RePEc:dnb:dnbwpp:705
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    References listed on IDEAS

    as
    1. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, in: Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), Handbook of Health Economics, volume 2, chapter 0, pages 499-637, Elsevier.
    2. Jacob A. Bikker, 2017. "Performance of the life insurance industry under pressure: efficiency, competition and consolidation," Chapters, in: Jacob A. Bikker & Laura Spierdijk (ed.), Handbook of Competition in Banking and Finance, chapter 9, pages 152-182, Edward Elgar Publishing.
    3. repec:ces:ifodic:v:5:y:2007:i:1:p:14567270 is not listed on IDEAS
    4. Jan Boone, 2008. "A New Way to Measure Competition," Economic Journal, Royal Economic Society, vol. 118(531), pages 1245-1261, August.
    5. Michiel van Leuvensteijn & Jacob Bikker & Adrian van Rixtel & Christoffer Kok Sørensen, 2011. "A new approach to measuring competition in the loan markets of the euro area," Applied Economics, Taylor & Francis Journals, vol. 43(23), pages 3155-3167.
    6. Hay, Donald A & Liu, Guy S, 1997. "The Efficiency of Firms: What Difference Does Competition Make?," Economic Journal, Royal Economic Society, vol. 107(442), pages 597-617, May.
    7. Stefan Greß & Maral Manouguian & Jürgen Wasem, 2007. "Health Insurance Reform in the Netherlands," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(01), pages 63-67, May.
    8. Wynand P. M. M. Van de Ven & Frederik T. Schut, 2009. "Managed competition in the Netherlands: still work‐in‐progress," Health Economics, John Wiley & Sons, Ltd., vol. 18(3), pages 253-255, March.
    9. J. A. Bikker & M. van Leuvensteijn, 2008. "Competition and efficiency in the Dutch life insurance industry," Applied Economics, Taylor & Francis Journals, vol. 40(16), pages 2063-2084.
    10. Jan Boone, 2008. "A New Way to Measure Competition," Economic Journal, Royal Economic Society, vol. 118(531), pages 1245-1261, August.
    11. Michael Raith, 2003. "Competition, Risk, and Managerial Incentives," American Economic Review, American Economic Association, vol. 93(4), pages 1425-1436, September.
    12. Jacob A. Bikker & Janko Gorter, 2011. "Restructuring of the Dutch Nonlife Insurance Industry: Consolidation, Organizational Form, and Focus," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 78(1), pages 163-184, March.
    13. Jacob A. Bikker, 2017. "Competition and Scale Economy Effects of the Dutch 2006 Health-Care Insurance Reform," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(1), pages 53-78, January.
    14. Stefan Greß & Maral Manouguian & Jürgen Wasem, 2007. "Health Insurance Reform in the Netherlands," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 5(1), pages 63-67, 05.
    15. Kox, Henk L.M. & Leeuwen, George van, 2011. "Measuring dynamic market selection by persistent scale inefficiencies - new methodology applied to EU business services," MPRA Paper 34986, University Library of Munich, Germany.
    16. Boone, Jan, 2001. "Intensity of competition and the incentive to innovate," International Journal of Industrial Organization, Elsevier, vol. 19(5), pages 705-726, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    (regulated) competition; concentration; healthcare insurance; performance-conduct-structure model; Boone-indicator; scale economies;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health

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