Anti-Competitive Markets Cause Lack of Competition in U.S. Health Insurance

A new study released by the American Medical Association (AMA) has underlined the anti-competitive nature of the American health insurance market. The report shows that anti-competitive behavior is hurting patients and physicians within the most popular managed health care plans in the country and raising health costs. The AMA reports that more than 68 percent of metro areas exhibit a major lack of health-insurer competition and one insurance company has a combined market share of at least 50 percent among HMOs, PPOs, and POSs.

“The broad scope of the new AMA analysis provides the most complete picture of the consolidation trend in health insurance markets,” says AMA President Jeremy Lazarus. “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.”

The least competitive health insurance markets were found in Alabama, Hawaii, and Michigan. These markets, and the other top ten areas, each supported a single insurer that accounted for the lion’s share of the market. An extreme example was found in Alabama where one insurer accounted for 88 percent of that state’s market.

“It appears that consolidation has resulted in the possession and exercise of health insurer monopoly power,” the study notes, pointing to increased premiums, watered-down benefits and insurers’ growing profitability as evidence that highly concentrated markets harm patients and physicians.

Unsurprisingly, the health insurance has responded to the claims from a defensive stance maintaining that the study is flawed due to limited and unreliable data:

“Families and employers in every state have multiple choices of both insurance plans and types of coverage,” America’s Health Insurance Plans President and CEO Karen Ignagni said in a statement. “Moreover, research clearly demonstrates that provider consolidation—not concentration of health plan markets—is driving up health care costs for consumers and employers.”