The Future of Health Care Costs: Hospital-Insurer Balance of Power

2 Pages Posted: 19 Apr 2011

See all articles by Austin Frakt

Austin Frakt

Government of the United States of America - Department of Veterans Affairs (VA); Boston University - School of Medicine; Boston University - School of Public Health

Date Written: November 1, 2010

Abstract

Even with the passage of the Patient Protection and Affordable Care Act (ACA), the U.S. health care system is and will remain predominantly private and market-based.

Market forces, then, heavily influence the characteristics and costs of the U.S. health system. In particular, market structure defined by the degree of consolidation in the hospital and insurance industries is a key determinant of the price paid for hospital services, affecting both the revenue earned by hospitals and the costs to indemnity insurers, self-funded employer plans and policyholders.

In this essay, I draw on the large and growing body of research on the history and consequences of hospital and insurer market concentration to support hypotheses about how provisions of the ACA may differentially affect hospitals, insurers and consumers in the public and private health care market sectors. I also offer suggestions for areas where antitrust policy and health economics research need more attention in order to prepare for the changes ahead.

Keywords: hospitals, market power, antitrust, insurers, health care costs, consolidation, mergers, health reform

Suggested Citation

Frakt, Austin, The Future of Health Care Costs: Hospital-Insurer Balance of Power (November 1, 2010). Available at SSRN: https://ssrn.com/abstract=1788132 or http://dx.doi.org/10.2139/ssrn.1788132

Austin Frakt (Contact Author)

Government of the United States of America - Department of Veterans Affairs (VA)

150 S. Huntington Ave (152H)
Boston, MA 02130
United States

Boston University - School of Medicine ( email )

Boston, MA 02118
United States

Boston University - School of Public Health ( email )

150 S. Huntington Ave (152H)
Boston, MA 02130
United States

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