Health Care Management Papers

Document Type

Journal Article

Date of this Version

4-2012

Publication Source

American Economic Review

Volume

102

Issue

2

Start Page

1161

Last Page

1185

DOI

10.1257/aer.102.2.1161

Abstract

We examine whether and to what extent consolidation in the US health insurance industry has contributed to higher employer-sponsored insurance premiums. We exploit the differential impact across local markets of a national merger of two insurers to identify the causal effect of concentration on premiums. Using data for large groups, we estimate premiums in average markets were approximately seven percentage points higher by 2007 due to increases in local concentration from 1998-2006. We also find evidence consolidation facilitates the exercise of monopsonistic power vis-Ã -vis physicians, leading to reductions in their absolute employment and earnings relative to other healthcare workers

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Date Posted: 27 November 2017

This document has been peer reviewed.