Vertical Integration and Plan Design in Healthcare Markets

José Ignacio Cuesta, Carlos Noton and Benjamin Vatter

No 32833, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the impacts of vertical integration between insurers and hospitals. We develop a bilateral oligopoly model of competition with endogenous plan design and hospital prices, and estimate it using administrative data from Chile. Integrated insurers offer plan networks that favor integrated hospitals, and non-integrated insurers restrict access to integrated hospitals to limit the raising rivals’ costs threat. These skewed networks restrict substitution across hospitals, softening price competition. Whereas vertical integration reduces double marginalization, plan design distortions and weaker hospital competition more than compensate. Vertical integration leads to a misallocation of demand across hospitals, higher healthcare spending, and lower welfare.

JEL-codes: I11 L13 L40 (search for similar items in EconPapers)
Date: 2024-08
New Economics Papers: this item is included in nep-com, nep-hea, nep-ind and nep-reg
Note: EH IO
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w32833.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:32833

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w32833
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().