From 2002 to 2020, there were over 1,000 mergers of US hospitals. During this period, the FTC took enforcement actions against 13 transactions. However, using the FTC’s standard screening tools, we find that 20 percent of these mergers could have been predicted to meaningfully lessen competition. We show that, from 2010 to 2015, predictably anticompetitive mergers resulted in price increases over 5 percent. We estimate that approximately half of predictably anticompetitive mergers had to be reported to the FTC per the Hart–Scott– Rodino Act. We conclude that there appears to be underenforcement of antitrust laws in the hospital sector.
Copyright American Economic Association; reproduced with permission
We analyze the economic consequences of rising US health care prices. By increasing the cost of employer-sponsored health insurance, rising prices serve as a de facto payroll tax on labor. Using exposure to hospital mergers as an instrument, we estimate that a 1% increase in health care prices lowers payroll and employment at non-health-care employers by 0.4%. At the county level, a 1% increase in health care prices reduces labor income by 0.27%, increases flows into unemployment by 1%, and lowers federal income tax receipts by 0.4%. The disemployment effects of rising prices are concentrated among lower- and middle-income workers.