Health Insurance Competition Vanishing: Study

THURSDAY Feb. 25, 2010 -- Competition in the health insurance industry is vanishing, according to an American Medical Association report that looked at data from 43 states and 313 metropolitan markets.

In 24 of the states, the two largest insurers had a combined market share of 70 percent or more. Last year, 18 of 42 states had that type of market situation.

Among the other findings:

  • In 54 percent of metropolitan markets, at least one insurer had a market share of 50 percent or more -- up from 40 percent of metropolitan markets the year before.
  • In 92 percent of metropolitan markets, at least one insurer had a share of 30 percent or more -- up from 89 percent of metropolitan markets the year before.
  • Ninety-nine percent of metropolitan markets are highly concentrated, according to federal merger guidelines, compared with 94 percent the year before.

The report, Competition in Health Insurance: A Comprehensive Study of U.S. Markets, was released this week.

"The near total collapse of competitive and dynamic health insurance markets has not helped patients," AMA President Dr. J. James Rohack said in a new release. "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."

Rohack added that a lack of competition in the health insurance industry "is clearly not in the best economic interest of patients," and the AMA wants the U.S. Department of Justice and state agencies "to more aggressively enforce antitrust laws that prohibit harmful mergers."

The AMA also wants the Department of Justice to consider the following measures: a retrospective study of health insurance mergers; research to identify the causes and consequences of health insurance market power; and creation of a system for predicting the effects that health insurance company mergers will have on patients and health care providers.

More information

The U.S. Agency for Healthcare Research and Quality has more about health insurance.

Posted: February 2010


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