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Insurer-Provider Networks in the Medical Care Market

Insurer-Provider Networks in the Medical Care Market Abstract I use data on the hospital networks offered by managed care health insurers to estimate the expected division of profits between insurers and providers. I include a simple profit-maximization framework and an additional effect: hospitals that can secure demand without contracting with all insurers (e.g., those most attractive to consumers and those that are capacity constrained) may demand high prices that some insurers refuse to pay. Hospital mergers may also affect price bargaining. I estimate that all three types of hospitals capture higher markups than other providers. These results provide information on the hospital investment incentives generated by bargaining. (JEL G22 , G34 , I11 , L25 ) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Review American Economic Association

Insurer-Provider Networks in the Medical Care Market

American Economic Review , Volume 99 (1) – Mar 1, 2009

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References (63)

Publisher
American Economic Association
Copyright
Copyright © 2009 by the American Economic Association
Subject
Articles
ISSN
0002-8282
DOI
10.1257/aer.99.1.393
Publisher site
See Article on Publisher Site

Abstract

Abstract I use data on the hospital networks offered by managed care health insurers to estimate the expected division of profits between insurers and providers. I include a simple profit-maximization framework and an additional effect: hospitals that can secure demand without contracting with all insurers (e.g., those most attractive to consumers and those that are capacity constrained) may demand high prices that some insurers refuse to pay. Hospital mergers may also affect price bargaining. I estimate that all three types of hospitals capture higher markups than other providers. These results provide information on the hospital investment incentives generated by bargaining. (JEL G22 , G34 , I11 , L25 )

Journal

American Economic ReviewAmerican Economic Association

Published: Mar 1, 2009

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