Health Insurance Markets Remain Highly Concentrated in Majority of US

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Health Insurance Markets – According to a new report from the American Medical Association (AMA), the concentration of health insurance markets in the United States is high and growing. While concentration in the Medicare Advantage (MA) market has decreased slightly, it remains extremely high. From 2014 to 2022, the commercial market became more concentrated.

Higher market concentration, which tends to occur as a result of mergers and acquisitions, often means low competition, which can raise antitrust concerns. In the 2023 edition of Competition in Health Insurance: A Comprehensive Study of U.S. Markets, AMA highlighted the negative consequences of market concentration, mostly in the form of higher premiums.

“Conceptually, mergers and acquisitions can have beneficial and/or harmful effects on consumers,” the AMA noted in its report. “However, only the latter has been observed.”

To assess the level of competition in health insurance markets, the report examined 381 metropolitan statistical areas (MSAs), all 50 states, and the District of Columbia. The report used the Horizontal Merger Guidelines from the US Department of Justice (DOJ) and the Federal Trade Commission, as well as the Herfindahl-Hirschman Index, to understand market concentration.

According to the report, highly concentrated markets existed in 73% of MSA-level commercial markets, 71% of MSA-level MA markets, and 90% of MSA-level public health exchange markets. While market concentration in the MA and public health exchange markets had decreased slightly since 2014, market concentration in the commercial market had increased from 71% in 2014.

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One health insurer had a market share of least 50% in 48% of the commercial MSAs, 31% of the MA MSAs, and 67% of the public health exchange MSAs.

“High market concentration tends to lower competition among health insurers, which can harm patients by raising insurance premiums above competitive levels,” said AMA President Jesse M. Ehrenfeld, MD, MPH. “The share of markets that are highly concentrated may be far higher than reflected under current federal guidelines. The AMA supports draft federal guidelines that would lower the regulatory threshold for markets to be considered highly concentrated. To reverse the trend toward health insurance consolidation, the AMA strongly supports the proposal as the proper prescription to scrutinize and potentially limit harmful insurance mergers.”

From 2014 to 2022, commercial market shares remained largely stable, with the top four insurers maintaining their national rankings. According to AMA, the findings at the national level “mask the findings at the local (MSA and state) levels.” “Health insurance markets are generally local.” Few insurers are considered “national” because enrollment is geographically concentrated with licenses in single states.

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Because most Blue Cross Blue Shield (BCBS) insurers are licensed in a single state, they appear small on a national scale, but a BCBS insurer has the largest market share in the majority of the country (41 states and 82% of MSAs).

At the national level, the insurers with the most market share were:

  • UnitedHealth Group with 14% commercial market share and 28% MA market share
  • Elevance Health (formerly Anthem) with 12% commercial market share and 6% MA market share
  • CVS (Aetna) with 11% for both commercial and MA market shares
  • Cigna with 10% commercial market share and 2% MA market share
  • Kaiser with 7% commercial market share and 6% MA market share

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