Mergers in Medicare Part D: Assessing market power, cost efficiencies, and bargaining power

Anna Chorniy*, Daniel Miller, Tilan Tang

*Corresponding author for this work

Research output: Contribution to journalArticle

Abstract

We empirically examine horizontal mergers amongst Part D insurers with the aim of assessing how market power, cost efficiencies, and bargaining power affect premiums and coverage characteristics, including drug access and out-of-pocket (OOP) cost. Our results reveal that market power raises premiums, but this is only a local effect that occurs in markets where the merging firms overlap. Mergers alter the bargaining process with upstream suppliers at both local and national levels, affecting drug access and OOP cost. We find evidence of cost efficiencies when firms restructure by consolidating their plan offerings.

Original languageEnglish (US)
Article number102548
JournalInternational Journal of Industrial Organization
Volume68
DOIs
StatePublished - Jan 2020

ASJC Scopus subject areas

  • Industrial relations
  • Aerospace Engineering
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management
  • Industrial and Manufacturing Engineering

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