Skip to main content

Equilibrium Provider Networks: Bargaining and Exclusion in Health Care Markets.

Author(s): Ho, Kate; Lee, Robin S

To refer to this page use:
Abstract: We evaluate the consequences of narrow hospital networks in commercial health care markets. We develop a bargaining solution, "Nash-in-Nash with Threat of Replacement," that captures insurers' incentives to exclude, and combine it with California data and estimates from Ho and Lee (2017) to simulate equilibrium outcomes under social, consumer, and insurer- optimal networks. Private incentives to exclude generally exceed social incentives, as the insurer benefits from substantially lower negotiated hospital rates. Regulation prohibiting exclusion increases prices and premiums and lowers consumer welfare without significantly affecting social surplus. However, regulation may prevent harm to consumers living close to excluded hospitals.
Publication Date: Feb-2019
Citation: Ho, Kate, Lee, Robin S. (2019). Equilibrium Provider Networks: Bargaining and Exclusion in Health Care Markets.. The American economic review, 109 (2), 473 - 522
ISSN: 0002-8282
EISSN: 1944-7981
Pages: 473 - 522
Language: eng
Type of Material: Journal Article
Journal/Proceeding Title: The American Economic Review
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

Items in OAR@Princeton are protected by copyright, with all rights reserved, unless otherwise indicated.