Introducing a Public Option or Capped Provider Payment Rates into Concentrated Insurer and Hospital Markets

Brief

Introducing a Public Option or Capped Provider Payment Rates into Concentrated Insurer and Hospital Markets

Abstract

In this paper we analyze several options for introducing a public option in non group and employer markets.  We introduce the reforms only in markets where insurer or hospital markets are concentrated. Limiting such reforms to markets where provider or insurer concentration has led to higher costs could make them more politically acceptable because the reforms would not interfere in competitive markets where costs are more moderate. we find that limiting the public option to concentrated in insurer and hospital markets has most of the effect of applying a public option or capped rates in all markets. This is because a large number of markets are concentrated and because these are markets with higher payment rates and thus where the public option or capped rates would have the greatest impact.

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