Healthcare Study: Most States Lack Competition
According to a recent report by the American Medical Association, 70 percent of commercial health insurance markets are "highly concentrated."
Could a lack of competition hurt your employees’ healthcare plans?
That’s what the American Medical Association (AMA) claims in a new study on health insurer concentration. The study of 385 metropolitan statistical areas showed high concentration across the country—including 90 percent of metro areas where a single insurance provider represented more than 30 percent of the health maintenance organization (HMO), preferred provider organization (PPO), or point of service (POS) market.
“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,” AMA President Dr. Jeremy A. Lazarus said in a statement.
The root problem: According to the group’s “Competition in Health Insurance: A Comprehensive Study of U.S. Markets,” more than two-thirds of all metropolitan areas studied had an HMO with more than 50 percent of the market share. Separately, another 68 percent have a PPO with more than half of the market share. And it’s the same situation with POS providers, too. “It appears that consolidation has resulted in the possession and exercise of health insurer monopoly power,” the study claims.
The least competitive state: According to AMA’s study, Alabama is the least competitive commercial health insurance market—with Hawaii and Michigan rounding out the top three. Part of the reason Alabama tops the list? Blue Cross Blue Shield of Alabama accounts for 88 percent of the state’s commercial health insurance market. The company defended itself in a statement to AL.com: “Blue Cross’ profit margins for the last five years have averaged less than one cent on the dollar, reflecting our goal of delivering value to our customers,” said Blue Cross Blue Shield spokeswoman Koko Mackin.
Insurance groups blast study: America’s Health Insurance Plans, an industry group, was quick to criticize the results of the study. “Families and employers in every state have multiple choices of both insurance plans and types of coverage. Moreover, research clearly demonstrates that provider consolidation—not concentration of health plan markets—is driving up healthcare costs for consumers and employers,” Robert Zirkelbach, a spokesman for the group, told Forbes.
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