In the largest study of its kind, a new AMA report finds a steep decline in competition in the nation's health insurance markets, fostering concerns about lack of innovation and efficiency in health care. "Most alarmingly, in the combined HMO and PPO markets, 95% of metropolitan areas have few competing health insurers," said AMA board member J. James Rohack. The study, which analyzed 294 metropolitan health insurance markets, also found that in 95% of markets a single insurer had a market share of 30% or greater, and in 56% of the markets a single insurer had a market share of 50% or greater.
Between 1995 and 2005, there were more than 400 mergers involving health insurers and managed care organizations, with no benefit to patients, said Rohack. "When it is difficult for a new insurer to enter a market with few dominant health plans, patients can be charged high prices without the threat of competition to keep insurers in check," said Rohack, who is calling for federal regulators to examine whether patients are being harmed by the health insurance consolidation. Read more about the study.
A spokesperson for America's Health Insurance Plans told HFMA, “There are a number of studies...that outline factors behind rising healthcare costs, and lack of competition among health insurers is not one of those factors." (Read more of the AHIP response.)
