How important is price variation between health insurers?

Stuart V. Craig, Keith Marzilli Ericson and Amanda Starc

Journal of Health Economics, 2021, vol. 77, issue C

Abstract: Prices negotiated between payers and providers affect a health insurance contract's value via enrollees’ cost-sharing and self-insured employers’ costs. However, price variation across payers is difficult to observe. We measure negotiated prices for hospital-payer pairs in Massachusetts and characterize price variation. Between-payer price variation is similar in magnitude to between-hospital price variation. Administrative-services-only contracts, in which insurers do not bear risk, have higher prices. We model negotiation incentives and show that contractual form and demand responsiveness to negotiated prices are important determinants of negotiated prices.

Keywords: Insurance; Price variation; Negotiated prices; Contract; Self-insured employers (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:77:y:2021:i:c:s0167629621000084

DOI: 10.1016/j.jhealeco.2021.102423

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