The Opportunities and Limitations of Monopsony Power in Healthcare: Evidence from the United States and Canada / Jillian Chown, David Dranove, Craig Garthwaite, Jordan Keener.

Format:

Book

Author/Creator:

Chown, Jillian.

Contributor:

National Bureau of Economic Research.

Dranove, David.

Garthwaite, Craig.

Keener, Jordan.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26122.

NBER working paper series no. w26122

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Opportunities and Limitations of Monopsony Power in Healthcare

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

Perhaps more than any other sector of the economy, healthcare depends on government resources. As a result, many healthcare systems rely on the use of government monopsony power to decrease spending. The United States is a notable exception, where prices in large portions of the healthcare sector are set without government involvement. In this paper we examine the economic implications of a greater use of monopsony power in the United States. We present a model of monopsony power and test its predictions using price differences between the United States and Canada - a country that represents an example of a "Medicare for All" style system. Overall, we find that wage differences for medical providers across the two countries are primarily driven by the broader labor market while price difference for prescription drugs are more directly the result of buyer power. We discuss theoretical reasons why a Canadian monopsonist may be more willing to exploit its buyer power over prescription drugs rather than provider wages and why a U.S. monopsonist might not be willing to do the same

Notes:

Print version record

July 2019.