Prices and market power in mental health care: Evidence from a major policy change in the Netherlands

Rudy Douven (), Chiara Brouns and Ron Kemp
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Rudy Douven: CPB Netherlands Bureau for Economic Policy Analysis
Chiara Brouns: Menzis

No 414, CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: In the Dutch health care system of managed competition, insurers and mental health providers negotiate on prices for mental health services. Contract prices are capped by a regulator who sets a maximum price for each mental health service. In 2013, the majority of the contract prices equaled these maximum prices. We study price setting after a major policy change in 2014. In 2014, mental health care providers had to negotiate prices with each individual health insurer separately, instead of with all insurers collectively as in 2013. Moreover, after a cost-price revision, the regulator increased in 2014 maximum prices by about 10%. Insurers and mental health providers reacted to this policy change by setting most contract prices below the new maximum prices. We find that in 2014 mental health providers with more market power, i.e. a higher willingness to pay measure, contracted significantly higher prices. Some insurers negotiated significantly lower prices than other insurers but these differences are unrelated to an insurers’ market share.

JEL-codes: I11 I18 L11 (search for similar items in EconPapers)
Date: 2020-05
New Economics Papers: this item is included in nep-com, nep-hea, nep-ias and nep-isf
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Journal Article: Prices and market power in mental health care: Evidence from a major policy change in the Netherlands (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:cpb:discus:414

DOI: 10.34932/h1tg-gt96

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