Hospital prices and market structure in the hospital and insurance industries.
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%.
Moriya
Asako S
AS
Heinz College, and Tepper School of Business, Carnegie Mellon University, Pittsburgh, USA. asako.moriya@gmail.com
Vogt
William B
WB
Gaynor
Martin
M
D000328:Adult; D000368:Aged; D003132:Commerce / Q000191:economics / Q000706:statistics & numerical data; D004465:Economic Competition / Q000191:economics / Q000706:statistics & numerical data; D004469:Economics, Hospital / Q000706:statistics & numerical data*; D006302:Health Services Research / Q000191:economics / Q000458:organization & administration / Q000706:statistics & numerical data; D006761:Hospitals / Q000706:statistics & numerical data*; D006801:Humans; D007221:Industry / Q000191:economics / Q000458:organization & administration / Q000706:statistics & numerical data; D007343:Insurance Carriers / Q000191:economics* / Q000706:statistics & numerical data; D007348:Insurance, Health / Q000191:economics* / Q000458:organization & administration / Q000706:statistics & numerical data; D008875:Middle Aged; D013223:Statistics as Topic; D014481:United States