- Decreased competition in health insurance is likely to do more harm than good, new AMA study concludes.
The America Medical Association released its most recent study of health payer competition, and the results fail to indicate the benefits of consolidation.
Based on data from Decision Resources Group and indices for measuring payer market share in metropolitan areas, AMA finds that “the majority of health insurance markets in the United States are highly concentrated.”
“Coupled with evidence on their anticompetitive behavior,” the report continues, “this strongly suggests that health insurers are exercising market power in many parts of the country and, in turn, causing competitive harm to consumers and providers of care.”
In combined health maintenance organization (HMO), preferred provider organization (PPO), point-of-service (POS), and exchange (EXCH) markets, 276 metropolitan statistical areas (MSAs; 73%) showed high concentration. Higher levels concentration were exhibited by POS (100%), EXCH (96%), HMO (96%), and PPO (88%) markets.
Product markets also demonstrated a lack of options for consumers. Forty-six percent of MSAs with combined markets had one health insurer controlling 50 percent or more of the market. That figure jumps to 76 percent for MSAs in HMO markets and 96 for MSAs in POS markets. In more than 90 percent of all product markets, one insurer maintained a market share of 30 percent or greater.
In an announcement accompanying the study’s release, AMA drew attention specific markets decreased competition was most salient and particular payers with sizable market share:
- The 10 states that experienced the largest decrease in competition levels between 2016 and 2017 were: 1. North Dakota, 2. Alaska, 3. Louisiana, 4. Indiana, 5. Utah, 6. North Carolina, 7. Arkansas, 8. Hawaii, 9. Alabama and 10. Mississippi.
- The 10 states with the least competitive commercial health insurance markets were: 1. Alabama, 2. Hawaii, 3. Louisiana, 4. Delaware, 5. South Carolina, 6. Michigan, 7. Alaska, 8. Kentucky, 9. Vermont, and 10. North Carolina. See the 10 states with the least competitive HMO, PPO, or POS markets.
- Anthem was the largest insurer in more MSA-level markets than any other insurer. It had the highest market share in 75 MSAs. Health Care Service Corp. was second with a market share lead in 40 MSAs, followed by UnitedHealth Group with a market share lead in 27 MSAs.
Given AMA’s opposition to several high-profile payer mergers over the past few years, the study’s findings raise doubts about the supposed benefits of consolidation for driving down healthcare spending and costs. (The study notably closes with a recap of government action that led to several failed merger attempts by some of the country’s leading payers.)
“These markets are ripe for the exercise of health insurer market power, which harms consumers and providers of care,” states the study. “Our findings should prompt federal and state antitrust authorities to vigorously examine the competitive effects of proposed mergers between health insurers.”
AMA leadership echoed these sentiments. “The AMA continues to urge that competition, not consolidation, is the right prescription for health insurance markets,” said President Barbara L. McAneny, MD.
“The slide toward insurance monopolies has created a market imbalance that disadvantages patients and favors powerful health insurers,” she added. “The prospect of future mergers involving health insurance companies should raise serious antitrust concerns. There is already too little competition among insurers, to the detriment of patients. Networks are already too narrow, and premiums are already too high.”
Recent reports have sought to show a correlation between the cost of health plans and utilization. A study Annals of Internal Medicine found that workers with diabetes who switched to high-deductible health plans requiring additional out-of-pocket expenses were more apt to put off necessary check-ups. Another reported that 40 percent or more of consumers will health benefits still struggle to afford their prescription drugs, leading them to choose between food or housing and medications.