Big health insurers control market in nearly three-fourths of the U.S., AMA report shows
Almost three-fourths of U.S. metropolitan areas lacked a competitive health insurance market in 2020, with shrinking options among payers harming patients and providers, the American Medical Association concluded in a study published Tuesday.
Seventy-three percent of 384 metropolitan statistical markets were highly concentrated in 2020, up from 71% in 2014, the physicians’ society reported in its 20th annual study of health insurance markets. In many cases, competition declined in areas dominated by just a few health insurers. Fifty-four percent of markets that were designated as highly concentrated in 2014 became even less competitive by 2020, and another 26% markets also reached highly concentrated levels, the report says.
Consolidation among insurers leads to lower payments for doctors and higher premiums for policyholders, research has shown. The health insurance lobbying group AHIP did not respond to an interview request about the AMA’s findings.
President Joe Biden has pledged that federal regulators will take a more critical stance toward corporate mergers, including between healthcare companies, than did prior administrations.
“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 Dr. Gerald Harmon said in a statement.
A single insurance company held at least half the market share in 46% of metropolitan areas, up from 40% in 2014, the AMA reports. Fourteen states had one health insurer that controlled at least half of their markets. Alabama had the least competitive market, followed by Michigan and Louisiana, according to the study. Wisconsin, Oregon and New York had the most competitive markets.
The AMA researchers defined market concentration levels by the Herfindahl-Hirschman Indices, which are used by the Justice Department and the Federal Trade Commission to determine whether a merger could harm competition. Anthem has the biggest geographic footprint in the industry, the study found. The investor-owned insurer, which offers Blue Cross and Blue Shield plans in 14 states, is the largest by market share in 80 of 384 metro areas, followed by not-for-profit Health Care Service Corp., which operates Blue Cross and Blue Shield plans in four states and is the largest in 44 locales. UnitedHealth Group and Blue Cross Blue Shield of Florida tied for the third-greatest geographic footprint, with both as the largest insurer in 22 metro areas.
Consolidation and high regulatory and financial barriers to entering a new market are responsible for the dearth of competition, the report says. The lack of options threatens the health of local markets, the AMA says.
Fifty-four percent of physicians treating patients work in practices with 10 or fewer providers, according to the study. Under antitrust law, independent physicians can’t negotiate collectively with insurers, leaving most doctors in weak bargaining positions. The low payments that result compromise access and quality of care, according to the AMA.
“Our findings should prompt federal and state antitrust authorities to vigorously examine the competitive effects of proposed mergers involving health insurers,” the report says.