Journal of Economic Perspectives
ISSN 0895-3309 (Print) | ISSN 1944-7965 (Online)
Competition in Health Insurance Markets
Journal of Economic Perspectives
(pp. 17–42)
(Complimentary)
Abstract
The United States relies primarily on private health insurance markets, yet these markets are highly concentrated and becoming more so over time. We document concentration across commercial, Medicare Advantage, and Medicaid markets. We then examine how asymmetric information—particularly adverse selection—interacts with market power to shape premiums, plan design, and consumer welfare. Empirical evidence confirms that insurer consolidation raises premiums. We discuss how antitrust enforcement, risk adjustment, regulation, and informational interventions shape competition and consumer welfare in these markets.Citation
Gaynor, Martin, and Amanda Starc. 2026. "Competition in Health Insurance Markets." Journal of Economic Perspectives 40 (2): 17–42. DOI: 10.1257/jep.20251459Additional Materials
JEL Classification
- G22 Insurance; Insurance Companies; Actuarial Studies
- G34 Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
- I13 Health Insurance, Public and Private
- I18 Health: Government Policy; Regulation; Public Health
- I38 Welfare, Well-Being, and Poverty: Government Programs; Provision and Effects of Welfare Programs
- K21 Antitrust Law
- L13 Oligopoly and Other Imperfect Markets