Regulating Hospital Prices Based On Market Concentration Is Likely To Leave High-Price Hospitals Unaffected

Concern about high hospital prices for commercially insured patients has motivated several proposals to regulate these prices. Such proposals often limit regulations to highly concentrated hospital markets. Using a large sample of 2017 US commercial insurance claims, we demonstrate that under the ma...

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Bibliographic Details
Published in:Health affairs (Millwood, Va.) Vol. 40; no. 9; pp. 1386 - 21
Main Authors: Pany, Maximilian J, Chernew, Michael E, Dafny, Leemore S
Format: Journal Article
Language:English
Published: United States The People to People Health Foundation, Inc., Project HOPE 01.09.2021
Subjects:
Action
Antitrust
Bipartisanship
Competition
Delivery of Health Care
Economic Competition
Health care policy
Hospitals
Humans
Insurance
Insurance claims
Market concentration
Market shares
Markets
Medicare
Outpatient care facilities
Patients
Price regulations
Prices
Pricing
Pricing policies
Product differentiation
Proposals
Regulation
United States
United States
United States > US
ISSN:0278-2715, 2694-233X, 1544-5208, 2694-233X
Online Access:Get full text
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Summary:Concern about high hospital prices for commercially insured patients has motivated several proposals to regulate these prices. Such proposals often limit regulations to highly concentrated hospital markets. Using a large sample of 2017 US commercial insurance claims, we demonstrate that under the market definition commonly used in these proposals, most high-price hospitals are in markets that would be deemed competitive or "moderately concentrated," using antitrust guidelines. Limiting policy actions to concentrated hospital markets, particularly when those markets are defined broadly, would likely result in poor targeting of high-price hospitals. Policies that target the undesired outcome of high price directly, whether as a trigger or as a screen for action, are likely to be more effective than those that limit action based on market concentration.
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ISSN:0278-2715
2694-233X
1544-5208
2694-233X
DOI:10.1377/hlthaff.2021.00001