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More metropolitan areas are dominated by single insurance companies

American Medical Association survey finds in 43 percent of metropolitan areas, a single health insurer had at least a 50 percent share of the market.

Jeff Lagasse, Associate Editor

Louisville Skyline

An American Medical Association study has found that in 169 of 389 metropolitan areas, or 43 percent, a single health insurer had at least a 50 percent share of the market. That's an 8 percent increase in such markets in a little more than two years.

The finding comes from the newly released 2017 edition of the AMA's Competition in Health Insurance: A Comprehensive Study of U.S. Markets, which examined market concentration in 2016. 

High market concentration tends to lower competition among commercial health insurers. These markets become ripe for the exercise of health insurer market power, which harms patients by raising premiums above competitive levels.

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The AMA study is intended to help researchers, policymakers and regulators identify markets in which consolidation among health insurers may cause anti-competitive harm to patients and the physicians who care for them.

"After years of largely unchallenged consolidation in the health insurance industry, a few recent attempts to consolidate have received closer scrutiny than in the past, including the proposed mergers of Anthem and Cigna, as well as Aetna and Humana," said AMA President David O. Barbe, MD, in a statement. "Previous versions of the AMA study played a key role in efforts to block the proposed mega-mergers by helping federal and state antitrust regulators identify markets where those mergers would cause anti-competitive harm."

AMA's analysis offers a picture of competition in health insurance markets for 389 metropolitan areas, as well as all 50 states and the District of Columbia. It's based on 2016 data on commercial enrollment in fully and self-insured health maintenance organizations, preferred provider organizations, point-of-service, public health exchanges and consumer-driven health plans. The report also separately examines competition for the main plan types, including HMO, PPO, POS and the exchanges.

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The results show that a significant absence of health insurer competition was found in 69 percent of metropolitan areas. These markets are rated "highly concentrated" based on federal guidelines used to assess the degree of competition in a market. In 43 percent of metropolitan areas, a single health insurer had at least a 50 percent share of the commercial health insurance market, compared to 40 percent in 2014.

Anthem has a bigger geographic footprint than any other health insurance company in the country, the report found. Anthem was the largest health insurer by market share in 82 of 389 metropolitan areas examined by the AMA. Health Care Service Corp. was second with a market share lead in 42 metropolitan areas, followed by UnitedHealth Group with a market share lead in 26 metropolitan areas.

The 10 states with the least competitive commercial health insurance markets were Alabama, Delaware, Hawaii, South Carolina, Louisiana, Michigan, Kentucky, Vermont, Alaska and Illinois.

The 10 states that experienced the largest increase in market concentration between 2014 and 2016 were Kentucky, Alaska, South Carolina, Mississippi, South Dakota, Oklahoma, Vermont, Arkansas, Nevada and New Mexico.

Twitter: @JELagasse
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