You are not currently logged in.
Access your personal account or get JSTOR access through your library or other institution:
If You Use a Screen ReaderThis content is available through Read Online (Free) program, which relies on page scans. Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
The Relation between the Blue Cross Market Share and the Blue Cross "Discount" on Hospital Charges
Roger Feldman and Warren Greenberg
The Journal of Risk and Insurance
Vol. 48, No. 2 (Jun., 1981), pp. 235-246
Published by: American Risk and Insurance Association
Stable URL: http://www.jstor.org/stable/252738
Page Count: 12
Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Preview not available
This article examines the relation between the Blue Cross share of the private hospital insurance market and the Blue Cross "discount" on hospital charges. The discount is a potential competitive advantage accruing to Blue Cross plans, relative to commercial insurance companies, in markets where Blue Cross uses cost-based hospital reimbursement. Two hypotheses are tested using a simultaneous equations model: that Blue Cross plans are more likely to obtain a discount when their market share is large and that the discount further increases market share. The tests provide some evidence that the discount increases Blue Cross's market share, but market share is not responsible for Blue Cross's obtaining a discount. A discussion of these results suggests that Blue Cross plans use the market power implied by high market share to pursue other objectives, which may include unnecessary administrative expenses or cost control activities.
The Journal of Risk and Insurance © 1981 American Risk and Insurance Association