4.4 Article

Insurer Market Structure and Variation in Commercial Health Care Spending

Journal

HEALTH SERVICES RESEARCH
Volume 49, Issue 3, Pages 878-892

Publisher

WILEY
DOI: 10.1111/1475-6773.12131

Keywords

Geographic variation; spending; utilization; competition; markets

Funding

  1. Commonwealth Fund [20100467]
  2. National Academy of sciences [IOM-2000000528]

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ObjectiveTo examine the relationship between insurance market structure and health care prices, utilization, and spending. Data SourcesClaims for 37.6million 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. MethodsRegression 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. ResultsInsurance 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). ConclusionGreater 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.

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