Heather Boushey: In Conversation with Leemore Dafny https://equitablegrowth.org/in-conversation-with-leemore-dafny/: 'Leemore Dafny: 'How can it possibly be a bad thing for consumers if insurers use some of their bargaining power to bring down the prices of the inputs into the health insurance product? The answer to that question is that it depends on how they are bringing down those prices.... From an antitrust enforcement perspective, savings passed through would be considered a benefit to consumers... a change in the division of existing surplus. But now, suppose something different—suppose that the only way the insurers get lower prices is not by taking away the margin, holding quantity constant, but by exercising their market power vis-à-vis these healthcare providers such as purchasing less, as well as paying less.... Lower prices in this setting can have an impact on the quantity and/or the quality of services, and that’s called monopsony, and it’s the flipside of monopoly. And just as monopoly benefits the seller of a good, monopsony benefits the buyer, in this case, the insurer, but at the expense not only of the healthcare providers but also of consumers in general...


#noted #2019-12-26

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