Covered California: The Impact of Provider and Health Plan Market Power on Premiums

We describe the market shares of health plans in California and in each of the nineteen rating regions. We examine the empirical relationship between measures of provider market concentration — spanning health plans, hospitals, and medical groups — and rating region premiums. To do this, we analyze premiums for silver and bronze plans for specific age groups. We find both medical group concentration and hospital concentration to be positively associated with premiums, while health plan concentration is not statistically significant. We simulate the impact of reducing hospital concentration to levels that would exist in moderately competitive markets. This produces a predicted overall premium reduction of more than 2 percent. However, in three of the nineteen rating regions, the predicted premium reduction was more than 10 percent. These results suggest the importance of provider market concentration on premiums.
Source: Journal of Health Politics, Policy and Law - Category: Health Management Authors: Tags: Health Policy & Education, Political Science, General, Public Policy Articles Source Type: research