Wilson JA, Foreman SE, Scheffler RM.
AHSR FHSR Annu Meet Abstr Book. 1994; 11: 66-7.
School of Public Health, University of California Berkeley.
STUDY OBJECTIVES. Plans often hold market power both in the market for health insurance and in the market for health careservices. Pauly has theorized that power in the insurance market may not be natural, but not in the market for health services. One of the main is how the Plans use their power. This study evaluates the Plans' use of market power in the context of payments to health care providers, administrative costs and premiums. DATA AND INFORMATION SOURCES. The study considers the cost and premium structures of Plans for eight quarters during 1987 and 1988. Data for the study comes from the Plans' Enrollment and Cost Containment Surveys. DATA COLLECTION AND METHODS. The study time series cross section data to estimate the Plans' exercise of market power as expressed by three equations: (1) administrative costs, (2) payments to providers and (3) premiums charged to subscribers. Model estimation uses Fuller Battese error component methods. PRINCIPAL FINDINGS. The Plans' exercise their monopsony power to reduce payments to providers. A contestable market for health insurance limits the Plans' ability to exercise monopoly power in the market for health insurance, encourages them to be more efficient in their administration and causes them to pass savings from reduced payments and administrative expenses on to consumers in the form of lower premiums. These findings have substantial policy implications in terms of regulating the market for health insurance and for the national debate about reform of the markets for health insurance and health services.
Publication Types:
Keywords:
- Biomedical Research
- Blue Cross Blue Shield Insurance Plans
- Cost Control
- Costs and Cost Analysis
- Health Expenditures
- Health Services
- Insurance, Health
- economics
- hsrmtgs
Other ID:
UI: 102212067
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