| dc.description.abstract |
Decades-long trends towards highly concentrated provider markets in healthcare have
serious implications for the prices of healthcare services, one of the leading drivers
of healthcare spending, and costs for consumers. This study examines the impact of
provider consolidation on costs for consumers by analyzing the relationship between
hospital market concentration and private insurance premiums in the Affordable Care
Act’s (ACA) health insurance marketplaces. Herfindahl-Hirschman Indices of market
concentration were computed for 51 hospital markets across the nation and those markets
were matched with premium data taken from Healthcare.gov via the Kaiser Family Foundation’s
annual analysis of premium changes. I used Ordinary Least Squares (OLS) regression
to determine the relationship between hospital market concentration and private insurance
premiums in the marketplaces, and I find a positive, significant relationship between
market concentration and premiums. Such a finding suggests that premium payers who
live in highly concentrated hospital markets may pay more for their health insurance
in the ACA’s marketplaces than those who live elsewhere, and such premium increases
are nontrivial. The significant relationship between provider consolidation and higher
premiums presents an opportunity for intervention to help lower healthcare costs moving
forward. Bearing this finding in mind, I present a policy recommendation for provider
consolidation moving forward that combines price transparency, regulation of hospital
market pricing and behavior, and anti-trust litigation.
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