The Role of Insurers in Health Care Spending and Production: Evidence from Utah

Benjamin R. Handel, Jonathan A. Holmes, Jonathan Kolstad and Kurt Lavetti

No 34561, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Private health insurers play a central role in determining the cost and quantity of health care in the United States. Despite this centrality, there has been limited empirical work studying how insurers differentially affect spending and consumption, especially for expensive and pervasive chronic conditions. We use hundreds of natural experiments involving employers switching their primary health insurer, together with a movers design, to estimate these causal effects. We find meaningful differences in total cost and prices for medical and pharmaceutical spending. Within-person changes in spending caused by forced reassignment across pairs of insurers, holding fixed plan generosity, are as large as 30% of total medical spending and 37% of drug spending. We also find substantial dispersion in insurer causal effects on health care spending and quantities for patients with diabetes, hypertension, and other chronic conditions. We find strong evidence for drug offsets as insurers who causally increase drug utilization also reduce medical costs and quantities overall and by condition. Finally, we find that employers do not select plans that reduce costs for their employees based on the match between employee conditions and estimated plan treatment effects, leaving significant cost savings on the table.

JEL-codes: G52 I11 L1 (search for similar items in EconPapers)
Date: 2025-12
Note: EH IO PE
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w34561.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:34561

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w34561
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 ().