Health insurer market power and employer size: an empirical evaluation of insurer concentration and wages through compensating differentials

Christopher S. Brunt and John Bowblis

Applied Economics, 2017, vol. 49, issue 30, 3005-3015

Abstract: This article explores the differentiated effects of health insurer market concentration on net compensation of employees across distinct firm sizes. Consistent with the existing literature evaluating insurer market concentration and the theory of compensating differentials, we find evidence of higher premiums and reduced net compensation for employees in markets with more concentrated insurers. Furthermore, we find evidence that the magnitude of these effects is distinctly smaller for large employers. This implies that mergers of large health insurance companies may have a significant impact on small businesses but that the effect is mitigated for larger employers.

Date: 2017
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DOI: 10.1080/00036846.2016.1251569

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