• Menu
  • Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Before Header

  • About Us
  • Lexicon
  • Contact Us
  • Our Store
  • ↑
  • ↓
  • ←
  • →

Balloon Juice

Come for the politics, stay for the snark.

Republicans: slavery is when you own me. freedom is when I own you.

You don’t get rid of your umbrella while it’s still raining.

So it was an October Surprise A Day, like an Advent calendar but for crime.

Stamping your little feets and demanding that they see how important you are? Not working anymore.

People are weird.

The gop couldn’t organize an orgy in a whorehouse with a fist full of 50s.

Republicans don’t trust women.

I did not have this on my fuck 2022 bingo card.

The cruelty is the point; the law be damned.

You cannot shame the shameless.

Every one of the “Roberts Six” lied to get on the court.

A lot of Dems talk about what the media tells them to talk about. Not helpful.

Russian mouthpiece, go fuck yourself.

You don’t get to peddle hatred on saturday and offer condolences on sunday.

Pessimism assures that nothing of any importance will change.

Biden: Oh no. We’ve upset Big Pharma again.

When do the post office & the dmv weigh in on the wuhan virus?

I conferred with the team and they all agree – still not tired of winning!

Motto for the House: Flip 5 and lose none.

Everyone is in a bubble, but some bubbles model reality far better than others!

🎶 Those boots were made for mockin’ 🎵

There’s always a light at the end of the frog.

Good lord, these people are nuts.

“What are Republicans afraid of?” Everything.

Mobile Menu

  • Four Directions Montana
  • Donate with Venmo, Zelle & PayPal
  • Site Feedback
  • War in Ukraine
  • Submit Photos to On the Road
  • Politics
  • On The Road
  • Open Threads
  • Topics
  • COVID-19 Coronavirus
  • Authors
  • About Us
  • Contact Us
  • Lexicon
  • Our Store
  • Politics
  • Open Threads
  • 2024 Elections
  • Garden Chats
  • On The Road
  • Targeted Fundraising!
You are here: Home / Anderson On Health Insurance / Market power across lines of business

Market power across lines of business

by David Anderson|  February 13, 20178:43 am| 6 Comments

This post is in: Anderson On Health Insurance

FacebookTweetEmail

Typically, full service health insurance companies will have several clusters of business. There is the low cost government cluster of Medicaid and SNP managed care. There is the medium cost government supported sector of Medicare Advantage, CHIP and low cost Exchange plans. And then there is the higher premium cluster of employer sponsored fully insured (ESI) plans and Administrative Services Only (ASO) self-insured employer plans. I worked at a full service firm. I was on the Medicaid geek team for the last three years.

Recently, I brought up the Rogers, Chernew and McWilliams Health Affairs paper on the impact of market power on local level provider and insurer pricing. They were only looking at employer sponsored insurance market power. They found what was to be expected. Entities with high relative market power got “better” rates from their point of view compared to entities with low market power. This was a good set of results as they were able to math up the trade-offs and attach some real numbers to the intuition.

My question though is how to account for the results if we are to assume that log-rolling in negotiations occurs?

An insurer might have a low market share for the high premium ESI/ASO market in a region. That same carrier could have a very high market share of the Medicare Advantage market. If that carrier is talking with a hospital that has never been in network to sign a comprehensive, all products contract, does the negotiation’s plausible agreement region get defined by each line of business’s relative market share or is the plausible agreement region defined solely by a blended dollar weighed marketshare?

More practically, does a hospital say that in order to get a stream of the Medicare Advantage money they’ll take lower than anticipated by RCM commercial rates or the carrier offer slightly higher Medicare Advantage rates to buy access for the employer side plans?

My intuition is that this type of log-rolling happens a lot. So how does it get measured and evaluated?

I don’t know.

FacebookTweetEmail
Previous Post: « Followership
Next Post: Information and Operations Security »

Reader Interactions

6Comments

  1. 1.

    bbleh

    February 13, 2017 at 10:24 am

    Haven’t read the paper, but since you’re talking about synergies across markets, the measure would be the difference between the observed aggregate activity (e.g., revenue, lives) and that predicted by a market-by-market analysis, assuming such predictions exist and are sufficiently accurate. Obvious problems include various sources of noise in the data, and actual dynamics in the markets (how long does a player’s position remain substantially the same in ALL relevant markets?). But for sure it exists — I’ve seen it firsthand in a closely related industry.

  2. 2.

    David Anderson

    February 13, 2017 at 10:46 am

    @bbleh: I think that type of analysis would be useful. I don’t think the data is good enough to do it on a national basis but it could be hacked together from states with good all claims payer databases

  3. 3.

    Aleta

    February 13, 2017 at 10:47 am

    OT: Lawyers and bankers reap $1.5 billion from failed health insurance mergers

    Aetna, Anthem, Cigna and Humana cumulatively spent about $1.5 billion on legal and financial fees since their proposed mergers were announced in summer 2015, according to documents filed with the Securities and Exchange Commission. … The $1.5 billion has been funneled to banks like Goldman Sachs, Citigroup and Credit Suisse and law firm giants like White & Case and Jones Day, which battled the Justice Department in court. That sum would have been enough to pay for the average Obamacare plan for more than 300,000 people for all of 2017, based on data fromHealthPocket.

    The insurance companies also hired consulting firms like Compass Lexecon. A recentProPublica report profiled that firm, which provides highly paid academics who argue in favor of large mergers in court.

    Why it matters: The big spending creates problems for consumers and investors. Consumers are paying for it through their insurance premiums, which continue to rise faster than general inflation.

    And every dollar spent on legal teams and financiers is a dollar investors lose. In 2016, Anthem said the expenses associated with its takeover of Cigna cost its shareholders $1.20 in earnings per share, while Aetna said its transaction with Humana sucked away $1.46 in earnings per share.

  4. 4.

    randy khan

    February 13, 2017 at 11:07 am

    Unless both sides are bad at negotiating, I would expect some amount of log-rolling. Essentially, the hospital will be willing to take some things it wouldn’t want to get the more lucrative bits, and the insurer would be willing to pay a bit more for some things to get the hospital to take bits it wouldn’t want.

  5. 5.

    David Anderson

    February 13, 2017 at 11:37 am

    @randy khan: Same here — this is just a data limitation of a very useful study. It was not measuring logrolling

  6. 6.

    DLG

    February 13, 2017 at 1:32 pm

    If this was truly and only a case of bilateral bargaining, then bargaining over a broader range of market segments/trades/issues/etc would be beneficial. Party A could get more of what it really values in segment 1 in exchange for more of what Party B cares about in segment 2. I.e. “log-rolling.”

    The problem is that there are other interests involved — health-care consumers, employer-employee benefit agreements, government — interests that are our (the public; policy analysts) primary concern. Not to mention actual/potential competitors in both the insurance and healthcare provider markets.

    I can think of two aspects where general (economic) industrial organization theory can shed some light. First, “multi-market contact” increases the likelihood of anti-competitive collusion. The key point being a game-theoretic argument that the more extensive the interactions, the larger the scope for “punishing” any party to the collusion who deviates from the (possibly implicit) collusive agreement. This logic is usually applied to oligopolistic competitors, but can also apply to vertically related businesses (e.g. insurers and providers) extracting rents from consumers and third-parties.

    Which leads to the second area — “rent-seeking,” which is the creation and exploitation of market and regulatory inefficiencies (in the economists’ sense) in pursuit of unearned/unjustified excess profits (a type of “rent” in economic jargon). Log-rolling to the detriment of third parties would be a type of coordinated rent -seeking. Just as multi-market contact can increase the opportunities for mutually beneficial exchanges (see para 1), it can also increase the opportunities for coordinated rent-seeking. Specifics will depend on the particulars of markets, institutions, and regulations (beyond my expertise in the case of healthcare). But one pretty obvious opportunity is to shift accounting of costs between market segments in order to then increase the costs shifted to third-party burden sharers (e.g. co-pays, various types of govt subsidy).

    Empirically, absent fine-grained information on agreements across market segments, a crude way to investigate the significance of these issues would be to condition on (e.g. in cross-tabulations or regressions) market concentration and share data for the other market segments the insurer and provider operate on. However, since opportunities for rent-seeking are sensitive to institutional and regulatory regime, we shouldn’t expect any regression effect to be stable when there are significant changes, such as implementation of the ACA.

Comments are closed.

Primary Sidebar

Recent Comments

  • SiubhanDuinne on Wednesday Evening Open Thread: Baltimore Bridge Updates (Apr 17, 2024 @ 9:55pm)
  • Facebones on Humpty Trumpty (Open Thread) (Apr 17, 2024 @ 9:54pm)
  • Harrison Wesley on Wednesday Evening Open Thread: Baltimore Bridge Updates (Apr 17, 2024 @ 9:52pm)
  • brantl on I Am All For This! (Apr 17, 2024 @ 9:50pm)
  • Miss Bianca on Wednesday Evening Open Thread: Baltimore Bridge Updates (Apr 17, 2024 @ 9:50pm)

🎈Keep Balloon Juice Ad Free

Become a Balloon Juice Patreon
Donate with Venmo, Zelle or PayPal

Balloon Juice Posts

View by Topic
View by Author
View by Month & Year
View by Past Author

Balloon Juice Meetups!

All Meetups
Talk of Meetups – Meetup Planning
Proposed BJ meetups list from frosty

Fundraising 2023-24

Wis*Dems Supreme Court + SD-8
Virginia House Races
Four Directions – Montana
Worker Power AZ
Four Directions – Arizona
Four Directions – Nevada

Featuring

Medium Cool
Artists in Our Midst
Authors in Our Midst
Positive Climate News
War in Ukraine
Cole’s “Stories from the Road”
Classified Documents Primer

Calling All Jackals

Site Feedback
Nominate a Rotating Tag
Submit Photos to On the Road
Balloon Juice Mailing List Signup
Balloon Juice Anniversary (All Links)
Balloon Juice Anniversary (All Posts)

Fix Nyms with Apostrophes

Balloon Juice for Ukraine

Donate

Twitter / Spoutible

Balloon Juice (Spoutible)
WaterGirl (Spoutible)
TaMara (Spoutible)
John Cole
DougJ (aka NYT Pitchbot)
Betty Cracker
Tom Levenson
David Anderson
Major Major Major Major
ActualCitizensUnited

Political Action 2024

Postcard Writing Information

Balloon Juice for Four Directions AZ

Donate

Balloon Juice for Four Directions NV

Donate

Site Footer

Come for the politics, stay for the snark.

  • Facebook
  • RSS
  • Twitter
  • YouTube
  • Comment Policy
  • Our Authors
  • Blogroll
  • Our Artists
  • Privacy Policy

Copyright © 2024 Dev Balloon Juice · All Rights Reserved · Powered by BizBudding Inc

Share this ArticleLike this article? Email it to a friend!

Email sent!