Slide 1 of 11
THE HERFINDAHL–HIRSCHMAN INDEX
In its annual report on state and regional health insurance markets, the American Medical Association (AMA) uses the Herfindahl-Hirschman index, or HHI, to measure market competitiveness based on the market share and number of firms in a market.
The score is calculated by squaring the market share of each company, then adding the resulting numbers, with a maximum score of 10,000 indicating a monopoly-controlled market. U.S. regulators consider above the 2,000 range to indicate markets that are somewhat concentrated.
Oregon, with an HHI score of 1272, has the country's most compeitive market, and Alabama, with a score of 8,166, has the most highly concentrated.
The most recent AMA report, published in February 2012, relies on data from 2009, and the group argues that "anti-competitive conditions exist" in 83 percent of the 368 metropolitan areas studied, and that in half of them, one insurer had a commercial market share of 50 percent or more.
Noting its opposition to insurer consolidation, the AMA contends that a lack of competition "threatens health care delivery across the country, leading to access to care being compromised and lower payment rates for physicians."
America's Health Insurance Plans, meanwhile, contends that provider consolidation has been the driving factor behind rising healthcare costs and, in turn, rising insurance premiums.