Analysis Group Economists Discuss Recent Scholarship on Health Care Pricing in an Article for the ABA’s Antitrust Source

November 10, 2020

In an article written for The Antitrust Source, a publication of the American Bar Association, Managing Principal Samuel Weglein, Manager Juliette Caminade, and Professor Tímea Laura Molnár of Central European University summarize and discuss recent health economics research on the effects of health insurer/employer bargaining and hospital mergers on health care pricing.

“Paper Trail: Working Papers and Recent Scholarship,” a feature in the publication’s October 2020 issue, includes the writers’ assessments of three research papers. The first, “The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured” by Zack Cooper, Stuart V. Craig, Martin Gaynor, and John Van Reenen, documents large differences in prices for private insurers, and offers evidence that relative provider and insurer bargaining power is an important determinant of health care prices.

Two other research papers, “The California Competitive Model: How Has It Fared, and What’s Next?” by Glenn Melnick, Katya Fonkych, and Jack Zwanziger; and “The Price Effects of Cross-Market Mergers: Theory and Evidence from the Hospital Industry” by Leemore Dafny, Kate Ho, and Robin S. Lee, focus on the influence of hospital systems on price setting, analyzing how increasingly prevalent cross-market hospital mergers can impact health care pricing.

Together, this body of research provides important insights into the impact of hospital mergers on health care pricing, highlighting the need to carefully account for the specific institutional features of a given market (or markets) that influence the bargaining among the various stakeholders in health care markets (i.e., hospitals, insurers, and employers).

Read the article