The strong concentration of the health insurance market continues | BenefitsPRO

Consolidation of the insurance market is the subject of a detailed new report by the American Medical Association (AMA), which finds that limited competition among insurers could harm consumers and providers.

The AMA report identified the insurance companies with the largest market shares among commercial health insurance, Medicare Advantage plans, and public health exchanges that are part of the Affordable Care Act (ACA).

High market concentration reduces competition among health insurance companies, which can harm patients by raising premiums above competitive levels, said AMA President Jesse M. Ehrenfeld, MD, MPH. The share of highly concentrated markets may be much higher than in the current situation. federal guidelines. The AMA supports draft federal guidelines that would lower the regulatory threshold to deem markets highly concentrated. To reverse the trend toward health insurance consolidation, the AMA strongly supports it [federal] a proposal for the right prescription for investigating and possibly limiting harmful insurance mergers.

Top insurers by market size and type.

Nationally, the AMA’s findings said the top 10 commercial health insurers by market share were: 1. UnitedHealth Group (14%), 2. Elevance Health (12%), 3. CVS (Aetna) (11%), 4 . Cigna (10%), 5. Kaiser Permanente (7%), 6. Health Care Service Corp. (6%), 7. Blue Cross Blue Shield of Michigan (2%), 8. Blue Cross Blue Shield of Florida ( 2 %), 9. Blue Shield of California (2%) and 10. Highmark (2%).

It also noted that UnitedHealth Group was the largest commercial health insurer by market share in the Medicare Advantage market nationally, with 42 percent of the MSA, followed by Humana with 22 percent of the MSA and CVS (Aetna), which has the market. In 7% of the MSA.

In the ACA market, 90% of MSA-level markets were highly concentrated in 2022, up from 95% in 2014. In 67% of the MSAs, one health insurance company had a market share of at least 50%.

Areas with large populations have a high degree of concentration

The report took a close look at 381 metropolitan statistical areas (MSAs) across the country. It found that 73 percent of MSA’s commercial markets were highly concentrated by national standards. In 48% of the markets, one insurer had a share of at least 50%.

The figures also showed that market concentration is not a new phenomenon. Between 2014 and 2022, the share of highly concentrated commercial markets rose from 71 percent to 73 percent nationwide. While a two-point increase in eight years is not dramatic, the larger point of the analysis is that the market concentration is high and appears firmly entrenched, and the numbers will continue to rise.

According to the analysis, persistently high market concentration may be related to the consolidation of insurance companies through mergers and acquisitions. Health insurance mergers and acquisitions raise serious antitrust concerns, the report adds. Conceptually, mergers and acquisitions can have beneficial and/or harmful effects on consumers. However, only the latter has been observed. Consolidation appears to have led health insurers to control and exercise monopoly power, the ability to raise and maintain premiums above competitive levels, rather than passing on all the gains to consumers.

Not a new problem

Market concentration is an ongoing issue across the healthcare industry, with analysts often warning of concentration and a lack of competition among providers such as health systems and hospital groups.

But regardless of which major stakeholder group is involved, there are still questions about how big companies control the market for consumers. The federal government is also taking a closer look at the issue; In recent months, the Biden administration has identified market consolidation as one of the areas it will come under increased regulatory scrutiny.

Anticompetitive procurement and practices can stifle fair competition, leading to higher health care costs, poorer working conditions and less innovation in the health care and pharmaceutical industries, a press release from the Biden administration said in December. The Federal Trade Commission, the Department of Justice, and the Department of Health and Human Services each seek to promote competition through regulatory and legislative actions to lower health care costs for families and taxpayers and improve the quality and access to health care for patients.

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The insurance companies are responsible

Americas Health Insurance Plans (AHIP), an industry group, disputed the report, saying competition between insurers has led to lower premiums in some markets. In a comment to MedCity News, AHIP’s director of communications said the industry is working to lower prices.

Health insurance providers are advocates for Americans fighting for lower prices and more choice for them, said Kristine Grow, director of communications for Americas Health Insurance Plans, in an email. We negotiate lower prices with doctors, hospitals and pharmaceutical companies, and consumers benefit from lower premiums as a result.

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