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Cited by 291Healthcare Policy and ManagementMerger and Competition AnalysisPharmaceutical Economics and Policy

Paying a Premium on Your Premium? Consolidation in the US Health Insurance Industry

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Dafny, Leemore, Duggan, Mark, Ramanarayanan, Subramaniam·2012·American Economic Review
DOI 10.1257/aer.102.2.1161
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Abstract

We examine whether and to what extent consolidation in the US health insurance industry has contributed to higher employer-sponsored insurance premiums. We exploit the differential impact across local markets of a national merger of two insurers to identify the causal effect of concentration on premiums. Using data for large groups, we estimate premiums in average markets were approximately seven percentage points higher by 2007 due to increases in local concentration from 1998–2006. We also find evidence consolidation facilitates the exercise of monopsonistic power vis-à-vis physicians, leading to reductions in their absolute employment and earnings relative to other healthcare workers. JEL: G22, I13

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  • In the Dafny et al. (2012) regression Equation (3), the dependent variable is the concentration of the hospital industry in market m and year t, and the explanatory variables are time fixed effects, market fixed effects, and the change in concentration in market m induced by a merger interacted with an indicator for t being after the merger.

    “In regression Equation (3), the dependent variable is the the concentration of the hospital industry in market m and year t, and explanatory variables are time fixed effects, market fixed effects, and the change in concentration in market m induced by a merger interacted with an indicator for t being after the merger.”

    From Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects (2020) · cites this paper as Dafny et al. (2012)

    Split into 2 atoms — 0 confirmed, 1 partially supported, 1 disputed, 0 misattributed, 0 unverifiable. Expand the claim to see per-atom verdicts.

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  • The stable groups assumption is satisfied for the Dafny et al. (2012) regression because there are many markets where the merger did not change concentration.

    “The stable groups assumption is satisfied: there are many markets where the merger did not change concentration.”

    From Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects (2020) · cites this paper as Dafny et al. (2012)

    In §III.A, the paper reports 46 of 139 markets as “largely unaffected” by the merger, with a simulated HHI change below 10. It does not say their concentration was unchanged or establish that a “stable groups assumption” was satisfied. (LLM, conf=0.85)

    Experimental — accuracy not yet measured

  • The Dafny et al. (2012) regression corresponds to Regression 1.

    “This regression corresponds to Regression 1.”

    From Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects (2020) · cites this paper as Dafny et al. (2012)

    Section B, “OLS Estimates of the Relationship between Market Structure and Premiums” (page unavailable), presents a regression as equation (1). But the citing sentence does not specify what “this regression” or “Regression 1” refers to, so our copy cannot establish that the two correspond. I searched for “Regression 1” and the paper’s equation (1). (LLM, conf=0.72)

    Experimental — accuracy not yet measured

  • The Dafny et al. (2012) regression is a sharp design.

    “This is a sharp design.”

    From Two-Way Fixed Effects Estimators with Heterogeneous Treatment Effects (2020) · cites this paper as Dafny et al. (2012)

    Section C (IV Estimates; page unavailable) describes an instrumental-variables design using merger-induced changes in market concentration. Our copy does not characterize the regression as a “sharp design”; searches for “sharp design,” a cutoff-based design, and “sharp” found no supporting passage. (LLM, conf=0.72)

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Cited by

Sorted by citations

Authors
Dafny, L., Duggan, M., & Ramanarayanan, S.
Affiliations
  • Northwestern University (US)
  • University of Pennsylvania (US)
  • University of California, Los Angeles (US)
ORCID
Duggan, Mark
Venue
American Economic Review
Publisher
American Economic Association
Published
2012-04-01
Volume
102
Issue
2
Pages
1161-1185
ISSN
0002-8282 (ISSN-L)
DOI
10.1257/aer.102.2.1161
OpenAlex
W2038069790
Cited by
291
References
0
Citations by year
2026: 17 · 2025: 15 · 2024: 12 · 2023: 20 · 2022: 12 · 2021: 36 · 2020: 13 · 2019: 23 · 2018: 24 · 2017: 21 · 2016: 11 · 2015: 18 · 2014: 24 · 2013: 22 · 2012: 11
FWCI
57.41
Type
journal article
Language
en
Open access
Locations
  • American Economic Review (publishedVersion)
  • PubMed (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
Funders
Northwestern University
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Healthcare Policy and Management
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Merger and Competition Analysis
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Pharmaceutical Economics and Policy
Keywords
health insurance consolidation, market concentration, monopsony power, physician employment, physician remuneration
MeSH terms
Economic Competition, Health Benefit Plans, Employee, Humans, Insurance, Health, United States, Health Care Sector, For-Profit Insurance Plans

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