AMA: 70% of commercial insurance markets are anti-competitive
The health insurance industry is a highly consolidated market, with only one insurer in most areas of the country, according to a new report from the American Medical Association.
The AMA found that 70 percent of the commercial insurance markets are "highly concentrated," leading to lower choices of doctors and higher healthcare costs. What's more, almost two in five metropolitan areas have only one insurer with a combined market share of at least 50 percent; and in 90 percent of markets, one insurer controls HMO, PPO and POS market share, Forbes reported.
"The new data demonstrate that most areas of the country have a single health insurer with an anticompetitive share of the HMO, PPO or POS market," AMA President Jeremy Lazarus said in a statement.
"Coupled with the concomitant large increases in premiums, insurer profitability, lower scope of benefits and high barriers to entry, 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," the report said.
Alabama wins the dubious honor of having the least competitive commercial insurance market in the country, where Blue Cross Blue Shield of Alabama comprises 88 percent of the state's commercial health insurance market, reported the Birmingham News. Rounding out the top 10 least competitive areas are Hawaii, Michigan, Delaware, Alaska, North Dakota, South Carolina, Rhode Island, Wyoming and Nebraska.
The insurance industry, however, took issue with the report. "The AMA's 30,000-foot view of markets isn't necessarily an accurate read of what is happening on the ground," Andy Hetzel, vice president of corporate communication for Blue Cross Blue Shield of Michigan, told The Detroit News. He added that despite being ranked as the third least competitive market, Michigan provides plenty of choices, including HMOs and other plans, that make the business competitive.
"Families and employers in every state have multiple choices of both insurance plans and types of coverage," Robert Zirkelbach, spokesman for America's Health Insurance Plans, said in a statement. "Moreover, research clearly demonstrates that provider consolidation--not concentration of health plan markets--is driving up healthcare costs for consumers and employers."
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