The Association Between Hospital Concentration And Insurance Premiums In ACA Marketplaces

Keeping the Affordable Care Act's health insurance Marketplaces financially accessible is critically important to their viability. While the relationship between the number of insurers and Marketplace premiums has received widespread attention, the role of hospital market concentration on premiums has been understudied. We examined the relationship between hospital market concentration and Marketplace insurance premiums in the period 2014-17, the extent to which the number of insurers modified this relationship, and whether community-level characteristics were associated with varying levels of concentration. We found that areas with the highest levels of hospital market concentration had annual premiums that were, on average, 5 percent higher than those in the least concentrated areas. Additionally, while an increased number of insurers was independently associated with lower premiums, that was not sufficient to offset the effects of increased hospital concentration on premium costs. Communities with lower socioeconomic status (as measured by median income) were more likely to have higher hospital market concentration. However, this was not consistent across all measures of socioeconomic status, such as measures of unemployment, use of the Supplemental Nutrition Assistance Program, and education. These findings help underscore the importance of exploring antitrust policy and other efforts that may reduce hospital concentration and help keep Marketplace premiums affordable.