Nash bargaining model of HMO premiums

Roland Maude-Griffin; Roger Feldman; Douglas Wholey

doi:10.1080/0003684042000238938

Nash bargaining model of HMO premiums

Roland Maude-Griffin, Roger Feldman, Douglas Wholey

Health Policy and Management

Research output: Contribution to journal › Article › peer-review

6 Scopus citations

Abstract

This paper estimates a model of commercial HMO premiums based on Nash's axiomatic approach to bargaining between HMOs and employers. The bargaining models incor porate variables that measure the 'power' of the parties to affect the division of potential gains from a contract. It is found that an increase in the number of competing HMOs increases the employer's bargaining power and leads to lower premiums, especially for for-profit HMOs. It is also found that employers' bargaining power over non-profit HMOs is positively related to the ratio of the HMO's administrative expenses/total expenses.

Original language	English (US)
Pages (from-to)	1329-1336
Number of pages	8
Journal	Applied Economics
Volume	36
Issue number	12
DOIs	https://doi.org/10.1080/0003684042000238938
State	Published - Jul 10 2004

Bibliographical note

Funding Information:
ACKNOWLEDGEMENTS This research was supported by the Robert Wood Johnson Foundation’s Health Care Financing and Organization initiative.

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abstract = "This paper estimates a model of commercial HMO premiums based on Nash's axiomatic approach to bargaining between HMOs and employers. The bargaining models incor porate variables that measure the 'power' of the parties to affect the division of potential gains from a contract. It is found that an increase in the number of competing HMOs increases the employer's bargaining power and leads to lower premiums, especially for for-profit HMOs. It is also found that employers' bargaining power over non-profit HMOs is positively related to the ratio of the HMO's administrative expenses/total expenses.",

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AB - This paper estimates a model of commercial HMO premiums based on Nash's axiomatic approach to bargaining between HMOs and employers. The bargaining models incor porate variables that measure the 'power' of the parties to affect the division of potential gains from a contract. It is found that an increase in the number of competing HMOs increases the employer's bargaining power and leads to lower premiums, especially for for-profit HMOs. It is also found that employers' bargaining power over non-profit HMOs is positively related to the ratio of the HMO's administrative expenses/total expenses.

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Nash bargaining model of HMO premiums

Abstract

Bibliographical note

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