Altarum's Private Insurance Research Collection

Commissioned Projects

Measuring and Testing Community Benefit Implications of Hospital vs. Insurer Market Power, Mehmet Sari, Len Nichols, George Mason University

Non-profit hospitals remain the most common form of hospital by far, but their roles in a post-ACA world have come under increasing scrutiny, partly due to accusations of high prices, especially for the uninsured, and partly due to concerns about the relation between the value of the tax exemption and the amount of community benefits actually delivered.  In addition to Congressional hearings and question letters, recent IRS revisions in Schedule H of Form 990 (Hellinger, 2009) and in the ACA (Internal Revenue Service, Treasury, 2013) have tightened up reporting requirements for non-profit hospitals about community health needs and what they are doing about those needs. Economic theory predicts that the profit margin from which community benefits can be financed will likely be affected by the relative market power of hospitals and their sometimes quasi-monopsonistic buyers, private health insurance plans.  Even more fundamentally, the prices hospitals charge private insurers will be affected by these relative market powers as well. Yet investigating these relationships has been difficult in large part because good data on the local market shares – the relevant market shares – of insurers and hospitals do not generally exist.  This study would partially remedy that, by creating a data base and overlapping map of insurer vs. hospital concentration in the 5 states with operational and accessible all payer claims data bases that list individual insurers separately – Colorado, Maine, Massachusetts, Oregon and Minnesota.  We will test for the impact of relative market power on the provision of community benefits.  7/1/18 – 7/14/19