This comprehensive analysis of claims data from three national insurers documents the extensive variation in the prices that hospitals receive for the same procedure. Payment rates vary not only across and within hospital markets but also within individual hospitals, suggesting that the relative bargaining power of hospitals and insurers plays a role in price determination. The work also establishes that monopoly hospitals are paid higher prices and are more likely to obtain contracts that place them at lower financial risk, whereas hospital prices are lower and contracts are more likely to be based on prospectively determined rates when the insurer market is more concentrated. Finally, analysis of hospital mergers over a five-year period demonstrates post-merger hospital price increases, with the largest impact observed when merging facilities are in closer proximity to one another.  

This cover story in The New York Times, written by Kevin Quealy and Margot Sanger-Katz, features a groundbreaking study on prices and spending in private insurance. This study, led by Yale University's Zack Cooper, was supported by grants from NIHCM Foundation and The Commonwealth Fund.