Market Forces in Healthcare Insurance: The Impact of Healthcare Reform on Regulated Competition Revisited

25 Pages Posted: 19 Jan 2021

See all articles by Jacob Antoon Bikker

Jacob Antoon Bikker

De Nederlandsche Bank; Utrecht University - School of Economics

Jack Bekooij

De Nederlandsche Bank

Date Written: January 18, 2021

Abstract

This paper investigates the impact of market forces on competitive behaviour and efficiency in healthcare by investigating the Dutch healthcare insurance reform in 2006. This reform replaced the dual system of public and private insurance with a single compulsory health insurance scheme, in which insurance providers compete for customers in a free market. We measure competition directly from either shifts in market shares, or developments in profits. Using formal tests we find that in each approach a structural break occurs after the reform: competition is significantly higher after 2006 than before. Several robustness tests confirm this outcome. Nevertheless, we find that the health insurance sector is still less competitive than the banking, manufacturing and service industries, and even less competitive than life insurance.

Keywords: [co(regulated) competition, concentration, healthcare insurance, performance-conduct-structure model, Boone-indicator, scale economiesmma separated]

JEL Classification: G22, H51, L11-L13

Suggested Citation

Bikker, Jacob Antoon and Bekooij, Jack, Market Forces in Healthcare Insurance: The Impact of Healthcare Reform on Regulated Competition Revisited (January 18, 2021). De Nederlandsche Bank Working Paper No. 705, Available at SSRN: https://ssrn.com/abstract=3769080 or http://dx.doi.org/10.2139/ssrn.3769080

Jacob Antoon Bikker (Contact Author)

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands

Jack Bekooij

De Nederlandsche Bank ( email )

Netherlands

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