Bargaining, Pooling, and Premium Inflation in the Brazilian Small Group Health Insurance Market
In this month’s edition of the NOVA SBE HEALTH ECONOMICS & MANAGEMENT SEMINAR SERIES, Mateus Dias, PhD in Economics from Prinston University, whose research broadly focuses on health economics, covering market design, industrial organization, and the impact of policy changes on health outcomes, will discuss: Bargaining, Pooling, and Premium Inflation in the Brazilian Small Group Health Insurance Market
Pooling is a widely used mechanism in regulated selection markets to contain price inflation and improve stability. I study one such regulatory change introduced by the Brazilian private health insurance market regulatory agency. The rule affects small group contracts, mainly provided by employers, and forces insurers to apply the same premium percentage change to every pooled contract. I leverage a unique dataset with premium percentage changes for all group contracts in Brazil and exploit a discontinuity with respect to the number of enrolees in each contract to identify the effect over premium changes of being pooled versus negotiating such adjustment. My results indicate that contracts with bargained changes experience premium increases about 13% lower. This difference is driven by differences in bargaining power between the two situations rather than differences in costs and not-for-profit insurers do not seem to take full advantage of their bargaining power. Finally, I show evidence suggesting that this particular pooling strategy, if anything, seems to generate low benefits accrued by contracts that would likely benefit from bargaining with insurers.
👉 Please register to this event here: https://forms.office.com/Pages/ResponsePage.aspx?id=4zEpxDNn5kGNQsSLozS7pG-926AOIKVKn47NrIk6teJUOU5RSDFJUEVON0QxWVM0N0lCTk1IQVhFMC4u
ABOUT MATEUS DIAS:
Mateus Dias is an Assistant Professor at Catolica Lisbon School of Business and Economics. He holds a Ph.D. in Economics from Princeton University and a M.A. in Business Economics from the Sao Paulo School of Economics – FGV. His research interests lie broadly within health economics, from its market design aspects and intersection with industrial organization to the effects that policy changes in these markets generate in health outcomes. His research has been published in journals such as The Review of Economic Studies and the American Economic Journal: Economic Policy.