TY  - JOUR
AU  - Dafny,Leemore
AU  - Duggan,Mark
AU  - Ramanarayanan,Subramaniam
TI  - Paying a Premium on Your Premium? Consolidation in the U.S. Health Insurance Industry
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15434
PY  - 2009
Y2  - October 2009
UR  - http://www.nber.org/papers/w15434
L1  - http://www.nber.org/papers/w15434.pdf
N1  - Author contact info:
Leemore Dafny
Department of Management and Strategy
Kellogg School of Management
Northwestern University
2001 Sheridan Road
Evanston, IL  60208-2001
Tel: 847/467-7511
Fax: 847/467-1777
E-Mail: l-dafny@kellogg.northwestern.edu

Mark Duggan
The Wharton School
University of Pennsylvania
1452 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104
Tel: 215-898-0928
Fax: 215-898-7635
E-Mail: mduggan@wharton.upenn.edu

Subramaniam Ramanarayanan
UCLA Anderson School of Management
110 Westwood Plaza, D-513
Los Angeles, CA 90095
E-Mail: subbu@anderson.ucla.edu
AB  - We examine whether and to what extent consolidation in the U.S. health insurance industry is leading to higher employer-sponsored insurance premiums. We make use of a proprietary, panel dataset of employer-sponsored healthplans enrolling over 10 million Americans annually between 1998 and 2006 to explore the relationship between premium growth and changes in market concentration. We exploit the differential impact of a large national merger of two insurance firms across local markets to estimate the causal effect of concentration on market-level premiums. We estimate real premiums increased by approximately 7 percentage points (in a typical market) due to the rise in concentration during our study period. We also find evidence that consolidation facilitates the exercise of monopsonistic power vis a vis physicians, whose absolute employment and relative earnings decline in its wake.
ER  -