The Future of Health Care Costs: Hospital-Insurer Balance of Power

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Abstract
Even with the passage of the Patient Protection and Affordable Care Act (ACA), the U.S. health care system is and will remain predominantly private and market-based. Market forces, then, heavily influence the characteristics and costs of the U.S. health system. In particular, market structure defined by the degree of consolidation in the hospital and insurance industries is a key determinant of the price paid for hospital services, affecting both the revenue earned by hospitals and the costs to indemnity insurers, self-funded employer plans and policyholders. In this essay, I draw on the large and growing body of research on the history and consequences of hospital and insurer market concentration to support hypotheses about how provisions of the ACA may differentially affect hospitals, insurers and consumers in the public and private health care market sectors. I also offer suggestions for areas where antitrust policy and health economics research need more attention in order to prepare for the changes ahead.

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