Health Insurance Competition: The Effect of Group Contracts

TILEC Discussion Paper No. 2010-040

CentER Discussion Paper No. 2010-55

24 Pages Posted: 3 Jun 2010 Last revised: 25 Nov 2010

See all articles by Jan Boone

Jan Boone

Tilburg University - Center for Economic Research (CentER); Centre for Economic Policy Research (CEPR); TILEC

Rudy Douven

CPB Netherlands Bureau for Economic Policy Analysis; CPB Netherlands Bureau for Economic Policy Analysis

Carline Droge

affiliation not provided to SSRN

Ilaria Mosca

Tilburg Law and Economics Center (TILEC); Dutch Healthcare Authority

Multiple version iconThere are 2 versions of this paper

Date Written: May 19, 2010

Abstract

In countries like the US and the Netherlands health insurance is provided by private firms. These private firms can offer both individual and group contracts. The strategic and welfare implications of such group contracts are not well understood. Using a Dutch data set of about 700 group health insurance contracts over the period 2007-2008, we estimate a model to determine which factors explain the price of group contracts. We find that groups that are located close to an insurers’ home turf pay a higher premium than other groups. This finding is not consistent with the bargaining argument in the literature as it implies that concentrated groups close to an insurer’s home turf should get (if any) a larger discount than other groups. A simple Hotelling model, however, does explain our empirical results.

Keywords: health insurance, health-plan choice, managed competition

JEL Classification: I11, L13

Suggested Citation

Boone, Jan and Douven, Rudy and Droge, Carline and Mosca, Ilaria, Health Insurance Competition: The Effect of Group Contracts (May 19, 2010). TILEC Discussion Paper No. 2010-040, CentER Discussion Paper No. 2010-55, Available at SSRN: https://ssrn.com/abstract=1618764 or http://dx.doi.org/10.2139/ssrn.1618764

Jan Boone (Contact Author)

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2399 (Phone)
+31 13 466 3042 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

TILEC ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Rudy Douven

CPB Netherlands Bureau for Economic Policy Analysis ( email )

P.O. Box 80510
The Hague, 2508 GM
Netherlands

HOME PAGE: http://www.cpb.nl/nl/org/homepages/rcmhd/

CPB Netherlands Bureau for Economic Policy Analysis ( email )

P.O. Box 80510
The Hague, 2508 GM
Netherlands

HOME PAGE: http://www.cpb.nl/nl/org/homepages/rcmhd/

Carline Droge

affiliation not provided to SSRN ( email )

Ilaria Mosca

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Dutch Healthcare Authority ( email )

Postbus 3017
Utrecht, 3502 GA
Netherlands

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