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health care reform debates, many policy makers presumed that a lack of competition in the U.S. health insurance industry had resulted in greater levels of uninsurance. However, such a presumption has no basis in current research. This study, with a panel data set of the 50 states and the District of Columbia over the years 2001-2007, examines how health-insurer market concentration at the state level influences the percentage of the population with either individually purchased or employer-sponsored private health insurance. Two-stage least squares estimates are derived using a lagged measure of health-insurer concentration as an instrument. Results suggest that health insurers exercise market power on the seller side of the health insurance marketplace, but the restriction of output is limited to the individually purchased insurance market segment. a congressional investigation of competition in the private health insurance industry. 2 Critics also complained that health insurers practice monopsony power by reimbursing health care providers at rates below the competitive level. For evidence of monopsony power on the part of health insurers, see Feldman and Wholey (

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Insurance producer compensation has incorporated contingent commissions for decades. In 2004, the New York State Attorney General sued insurers and brokers, alleging compensation abuses and calling for elimination of some forms of contingent commissions. Daily stock price return data reveal negative announcement-period portfolio returns for property-casualty carriers, suggesting expected negative cash flow effects. Firm-level losses were related to intensity of contingent commission use, suggesting that the effects of such regulatory changes would be felt most by firms that relied on contingent commissions. Investors believed contingent commissions were valuable not only for producers but also for carriers.

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