Feb. 23, 2010, CHICAGO - Competition in the health insurance industry is disappearing with more markets across the country dominated by one or two insurers, according to the American Medical Association's newly released edition of Competition in Health Insurance: A Comprehensive Study of U.S. Markets.
In 24 of the 43 states reported in the new AMA report, the two largest insurers had a combined market share of 70 percent or more. Last year, just 18 of 42 states had two insurers with a combined market share of 70 percent or more.
"The near total collapse of competitive and dynamic health insurance markets has not helped patients," said AMA President J. James Rohack, M.D. "As demonstrated by proposed rate hikes in California and other states, health insurers have not shown greater efficiency and lower health care costs. Instead, patient premiums, deductibles and co-payments have soared without an increase in benefits in these increasingly consolidated markets."
The new AMA study analyzed 43 states and 313 metropolitan markets against an index used by federal regulators for measuring market concentration. Markets that rate "highly concentrated" according to the federal index are areas of the country where insurer consolidation may have harmful effects on patients, physicians, employers and the economy.
By reviewing enrollments in private health maintenance organizations (HMOs) and preferred provider organizations (PPOs), the new AMA study found:
- Ninety-nine percent of metropolitan markets are "highly concentrated" according to federal merger guidelines (up from 94 percent metropolitan markets the year before).
- In 54 percent of metropolitan markets, at least one insurer had a market share of 50 percent or greater (up from 40 percent of metropolitan markets the year before).
- In 92 percent of the metropolitan markets, at least one insurers had a market share of 30 percent or greater (up from 89 percent of metropolitan markets the year before).
"An absence of competition in health insurance markets is clearly not in the best economic interest of patients," said Dr. Rohack. "The AMA has urged the Department of Justice (DOJ) and state agencies to more aggressively enforce antitrust laws that prohibit harmful mergers."
To restore a competitive balance to health insurance markets, the AMA has also urged the DOJ to consider the following steps:
- Perform a retrospective study of health insurance mergers similar to that performed by the Federal Trade Commission on hospital mergers;
- Commission new research to identify causes and consequences of health insurer market power; and
- Create a system for predicting the effects health insurer mergers will have on consumer and provider markets.
Competition in Health Insurance: A Comprehensive Study of U.S. Markets is free to AMA members. Non-members can purchase the study for $150. To order the study, please visit the AMA Bookstore online, or call (800) 621-8335 and mention AMA Bookstore item number OP427109.
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Editor's Note: Credentialed members of the media can obtain a free copy of the AMA's newest study on competition in the nation's health insurance industry by contacting AMA Media Relations at: (312) 464-4430.
For additional information, please contact:
Robert J. Mills
AMA Media Relations