The Effects of Health Plan Concentration on Hospital Prices, Costs, Capacity, Charity Care, and Outcomes

Do differences in health plan concentration affect hospital performance in important areas, including prices, costs, staffing, capacity, charity care, and patient outcomes? In particular, they addressed the following questions: 1) Do increases in health plan concentration slow hospital price growth? 2) Does increased health plan concentration lead to lower hospital growth? 3) Do increases in health plan concentration lead to reduced capacity in terms of closure or reductions of specialty units in hospitals (such as ER or trauma center) and/or reduced hospital staffing? 4) Do increases in health plan concentration affect patient outcomes? 5) Do hospitals reduce charity care in response to increased health plan concentration? 6) Do any of the above observed effects of health plan concentration differ depending on the level of managed care penetration, differences in dominant form of managed care (HMO vs. PPO), or differences in markets dominated by for-profit compared to not-for-profit health plans? The objective of this project was to inform the policy debate about whether health plan consolidation is welfare decreasing or welfare increasing.