Most larger health care markets dominated by a small group of insurers

The American Medical Association (AMA) published a report suggesting that highly concentrated health insurance markets are on the rise in the U.S., with a limited pool of large insurers dominating the market.

The newest addition of the AMA’s Competition in Health Insurance: A Comprehensive Study of U.S. Markets “analyzed market concentration and health insurer market shares for 384 metropolitan statistical areas (MSAs), the 50 states and the District of Columbia,” the AMA explained. “For the first time, the study also presents national-level market shares for the 10 largest health insurers in the U.S. The study’s findings show most health insurance markets in the U.S. are highly concentrated leaving millions of Americans with more limited health insurer options.”

High concentration within health care markets, according to the AMA’s Division of Economic and Health Policy Research, is typically caused by consolidation, “which can lead to the exercise of market power and, in turn, harm to consumers and providers of care… Conceptually, mergers and acquisitions can have beneficial and harmful effects on consumers. However, only the latter has been observed.”

The problem, the study authors explained, is that large-scale consolidation has given health insurers monopoly power “instead of the passing of any benefits obtained through to consumers.”

Among the study findings:

  • “Seventy-three percent (280) of [metropolitan statistical areas] MSA-level markets were high concentrated according to federal guidelines.
  • “Forty-six percent (178) of MSA-level markets had one insurer with a share of 50% or more.
  • “Between 2014 and 2020, the share of highly concentrated markets rose from 71% to 73%.
  • “Fifty-four percent of markets that were already highly concentrated in 2014 became even more concentrated by 2020.
  • “The health insurers with the highest market share in the most MSA-level markets were:
    1. Anthem (80 MSAs)
    2. Health Care Service Corp. (44 MSAs)
    3. UnitedHealth Group and Blue Cross Blue Shield of Florida (each with 22 MSAs apiece)
    4. Highmark and Kaiser (each with 20 MSAs apiece).
  • The 10 states with the least competitive commercial health insurance markets were:
    1. Alabama
    2. Michigan
    3. Louisiana
    4. South Carolina
    5. Hawaii
    6. Kentucky
    7. Alaska
    8. Illinois
    9. North Dakota
    10. Oklahoma.

      (See the 10 states with the least competitive PPO or exchange markets.

  • Fourteen states had one health insurer with a share of 50% or more of the commercial health insurance market.
  • “The 10 largest health insurers in the U.S. at the national-level by market share were:
    1. UnitedHealth Group (15%)
    2. Anthem (12%)
    3. Aetna (11%)
    4. Cigna (10%)
    5. Kaiser (7%)
    6. Health Care Service Corp. (6%)
    7. Blue Cross Blue Shield of Michigan (2%)
    8. Blue Cross Blue Shield of Florida (2%)
    9. Blue Shield of California (2%)
    10. Centene (2%).”

“As merger rumors involving health insurers swirl, the prospect of future consolidation in the health insurance industry should be more closely scrutinized given the low levels of competition in most health insurance markets,” AMA President Gerald E. Harmon, MD, said in a statement. “For two decades, the AMA study has been helping researchers, lawmakers, policymakers, and federal and state regulators identify markets where consolidation involving health insurers may cause competitive harm to consumers and providers of care.”

John McKenna, Associate Editor, BreakingMED™

Cat ID: 151

Topic ID: 88,151,730,192,151,60,925