title: Market Share Matters: Evidence Of Insurer And Provider Bargaining Over Prices.
abstract: Proposed mergers among large US health insurers and growing consolidation among providers have renewed concerns about the effects of market concentration on commercial health care prices. Using multipayer claims for physician services provided in office settings, we estimated that-within the same provider groups-insurers with market shares of 15 percent or more (average: 24.5 percent), for example, negotiated prices for office visits that were 21 percent lower than prices negotiated by insurers with shares of less than 5 percent. Analyses stratified by provider market share suggested that insurers require greater market shares to negotiate lower prices from large provider groups than they do when negotiating with smaller provider groups. For example, office visit prices for small practices were $88, $72, and $70, for insurers with market shares of <5 percent, ≥5 to <15 percent, and ≥15 percent, respectively, whereas prices for large provider groups were $97, $86, and $76, exhibiting a continued decrease across higher insurer-market-share categories. These results suggest that mergers of health insurers could lower the prices paid to providers, particularly providers large enough to obtain higher prices from insurers with modest market shares. Continued monitoring will be important for determining the net effects of the countervailing trends of insurer and provider consolidation on the affordability of health care.
authors.affiliation: Eric T. Roberts is a postdoctoral fellow in the Department of Health Care Policy at Harvard Medical School, in Boston, Massachusetts.
authors.forename: Eric T
authors.initials: ET
authors.lastname: Roberts
authors.affiliation: Michael E. Chernew is the Leonard D. Schaeffer Professor of Health Care Policy in the Department of Health Care Policy, Harvard Medical School.
authors.forename: Michael E
authors.initials: ME
authors.lastname: Chernew
authors.affiliation: J. Michael McWilliams (mcwilliams@hcp.med.harvard.edu) is the Warren Alpert Associate Professor of Health Care Policy in the Department of Health Care Policy, Harvard Medical School.
authors.forename: J Michael
authors.initials: JM
authors.lastname: McWilliams
mesh_terms: D003132:Commerce / Q000706:statistics & numerical data*; D003695:Delivery of Health Care; D004465:Economic Competition / Q000191:economics*; D006801:Humans; D007343:Insurance Carriers / Q000706:statistics & numerical data*; D007348:Insurance, Health / Q000191:economics; D017008:Negotiating / Q000379:methods*; D010820:Physicians / Q000191:economics*; D017149:Private Sector; D014481:United States
keywords: Cost of Health Care; Health Economics; Health Spending