HSA 4321 Lecture Notes - Lecture 13: Most Favoured Nation, Health Maintenance Organization, Managed Care
Document Summary
Concentration & premiums: the ama data , five of the top 14 states are among the 10 states with the highest average individual premium (meps data) Alaska, rhode island, new hampshire, dc, delaware: but, two of these top 14 had premiums that were in the lowest 11 of the meps. In a fully competitive market health insurance premiums should be independent of the profitability of the firm buying coverage. Dafny (2010) examines the effects of insurer concentration on premiums by exploiting the profitability of larger employers buying insurance coverage. Insurers and employer-purchasers engage in bilateral negotiation: employers are reluctant to switch pla(cid:374)s (cid:862)i(cid:374) good ti(cid:373)es(cid:863) Insurers seek to take advantage of this reluctance. Tests this by looking at premiums over 1998-2005 from 776 employers in 139 geographic areas: median employer had 10,000 employees in 47 different markets, focus on purchased polices of these large employers. This means essentially looking at hmo premiums.
