title: Covered California: The Impact of Provider and Health Plan Market Power on Premiums.
abstract: We explain the establishment of Covered California, California's health insurance marketplace. The marketplace uses an active purchaser model, which means that Covered California can selectively contract with some health plans and exclude others. During the 2014 open-enrollment period, it enrolled 1.3 million people, who are covered by eleven health plans. We describe the market shares of health plans in California and in each of the nineteen rating regions. We examine the empirical relationship between measures of provider market concentration--spanning health plans, hospitals, and medical groups--and rating region premiums. To do this, we analyze premiums for silver and bronze plans for specific age groups. We find both medical group concentration and hospital concentration to be positively associated with premiums, while health plan concentration is not statistically significant. We simulate the impact of reducing hospital concentration to levels that would exist in moderately competitive markets. This produces a predicted overall premium reduction of more than 2 percent. However, in three of the nineteen rating regions, the predicted premium reduction was more than 10 percent. These results suggest the importance of provider market concentration on premiums.
authors.affiliation: University of California, Berkeley.
authors.forename: Richard M
authors.initials: RM
authors.lastname: Scheffler
authors.affiliation: University of California, Berkeley.
authors.forename: Eric
authors.initials: E
authors.lastname: Kessell
authors.affiliation: University of California, Berkeley.
authors.forename: Margareta
authors.initials: M
authors.lastname: Brandt
mesh_terms: D002140:California; D004465:Economic Competition; D006801:Humans; D019458:Insurance Coverage / Q000191:economics*; D007348:Insurance, Health; D058991:Patient Protection and Affordable Care Act
keywords: Covered California; health insurance marketplace