More markets across the country are dominated by one or two health insurance companies, showing that competition in the industry is decreasing, according to a new study by the American Medical Association.
The newly released edition of Competition in Health Insurance: A Comprehensive Study of U.S. Markets includes data from 43 U.S. states and 313 metropolitan markets. In 24 of the 43 states reporting, the two largest insurers had a combined market share of 70 percent or more, up from 18 of 42 states that reported data last year, according to the AMA.
The new AMA study reviewed enrollment by private HMOs and PPOs and found the following data, according to an AMA news release:
- Ninety-nine percent of metropolitan markets are "highly concentrated" according to federal merger guidelines (up from 94 percent in the previous year).
- In 54 percent of metropolitan markets, at least one insurer had a market share of 50 percent or greater (up from 40 percent in the previous year).
- In 92 percent of the metropolitan markets, at least one insurer had a market share of 30 percent or greater (up from 89 percent in the previous year).
J. James Rohack, MD, president of the AMA, noted that the findings show that competition is decreasing, which is not in the "best economic interest of patients," according to the release. Dr. Rohack said in the release, "The AMA has urged the Department of Justice and state agencies to more aggressively enforce antitrust laws that prohibit harmful mergers."
The AMA recommends the following steps to the DOJ in order to promote increased competition among health insurers:
- 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."
Read the AMA's release on competition in the health insurance industry.