Insurer Market Structure and Variation in Commercial Health Care Spending
Article first published online: 5 DEC 2013
© Health Research and Educational Trust
Health Services Research
Volume 49, Issue 3, pages 878–892, June 2014
How to Cite
McKellar, M. R., Naimer, S., Landrum, M. B., Gibson, T. B., Chandra, A. and Chernew, M. (2014), Insurer Market Structure and Variation in Commercial Health Care Spending. Health Services Research, 49: 878–892. doi: 10.1111/1475-6773.12131
- Issue published online: 16 MAY 2014
- Article first published online: 5 DEC 2013
- Manuscript Accepted: 20 SEP 2013
- Commonwealth Fund. Grant Number: 20100467
- Geographic variation;
To examine the relationship between insurance market structure and health care prices, utilization, and spending.
Claims for 37.6 million privately insured employees and their dependents from the Truven Health Market Scan Database in 2009. Measures of insurer market structure derived from Health Leaders Inter study data.
Regression models are used to estimate the association between insurance market concentration and health care spending, utilization, and price, adjusting for differences in patient characteristics and other market-level traits.
Insurance market concentration is inversely related to prices and spending, but positively related to utilization. Our results imply that, after adjusting for input price differences, a market with two equal size insurers is associated with 3.9 percent lower medical care spending per capita (p = .002) and 5.0 percent lower prices for health care services relative to one with three equal size insurers (p < .001).
Greater fragmentation in the insurance market might lead to higher prices and higher spending for care, suggesting some of the gains from insurer competition may be absorbed by higher prices for health care. Greater attention to prices and utilization in the provider market may need to accompany procompetitive insurance market strategies.