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Hospital and Health Insurance Markets Concentration and Inpatient Hospital Transaction Prices in the U.S. Health Care Market
Author(s) -
Dauda Seidu
Publication year - 2018
Publication title -
health services research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.706
H-Index - 121
eISSN - 1475-6773
pISSN - 0017-9124
DOI - 10.1111/1475-6773.12706
Subject(s) - endogeneity , inpatient care , consolidation (business) , instrumental variable , health care , market concentration , panel data , enforcement , actuarial science , business , hospital care , transaction cost , medicine , economics , monetary economics , finance , market structure , econometrics , political science , law , economic growth , industrial organization
Objective To examine the effects of hospital and insurer markets concentration on transaction prices for inpatient hospital services. Data Sources Measures of hospital and insurer markets concentration derived from American Hospital Association and HealthLeaders‐InterStudy data are linked to 2005–2008 inpatient administrative data from Truven Health MarketScan Databases. Study Design Uses a reduced‐form price equation, controlling for cost and demand shifters and accounting for possible endogeneity of market concentration using instrumental variables ( IV ) technique. Principal Findings The findings suggest that greater hospital concentration raises prices, whereas greater insurer concentration depresses prices. A hypothetical merger between two of five equally sized hospitals is estimated to increase hospital prices by about 9 percent ( p < .001). A similar merger of insurers would depress prices by about 15.3 percent ( p < .001). Over the 2003–2008 periods, the estimates imply that hospital consolidation likely raised prices by about 2.6 percent, while insurer consolidation depressed prices by about 10.8 percent. Additional analysis using longer panel data and applying hospital fixed effects confirms the impact of hospital concentration on prices. Conclusion The findings provide support for strong antitrust enforcement to curb rising hospital service prices and health care costs.