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KAEA Applied Micro Seminar
December 16, 2021 @ 8:00 pm - 9:30 pm EST
Presenter: Jee-Hun Choi (Lehigh University)
Date/Time: Dec 16 (Thursday) 8PM EST/ Dec 17 Friday 10AM KST
Password: 976985
Title: The Impact of Insurer Size Increase on Negotiated Prices: Evidence from the ACA in Arkansas
Abstract: Empirical evidence on the causal relationship between insurer size and negotiated
prices in US health care has been limited by the lack of exogenous variation in insurer
size. Using an exogenous enrollment increase in the Arkansas individual market due
to the state’s unique Medicaid expansion, I find that the negotiated hospital prices for
the largest insurer in that market decreased by 18% after the expansion. My analysis
reveals that the primary mechanism behind the price reduction is the insurer’s improved
bargaining position due to its size increase, rather than improved bargaining ability.
The savings in inpatient expenditure amount to 12% of the total inpatient expenditure
in the market. Moreover, assuming that insurers preserve the same profit margin,
the resulting savings in premium expenditure amount to 10% of the total premium
expenditure in the market.
prices in US health care has been limited by the lack of exogenous variation in insurer
size. Using an exogenous enrollment increase in the Arkansas individual market due
to the state’s unique Medicaid expansion, I find that the negotiated hospital prices for
the largest insurer in that market decreased by 18% after the expansion. My analysis
reveals that the primary mechanism behind the price reduction is the insurer’s improved
bargaining position due to its size increase, rather than improved bargaining ability.
The savings in inpatient expenditure amount to 12% of the total inpatient expenditure
in the market. Moreover, assuming that insurers preserve the same profit margin,
the resulting savings in premium expenditure amount to 10% of the total premium
expenditure in the market.