Healthcare Business News

AMA report sees monopolies in insurance markets

By Ashok Selvam
Posted: November 28, 2012 - 6:00 pm ET

The American Medical Association's annual report on the health insurance marketplace suggests that 70% of metropolitan markets lack competition among insurers, prompting a quick critical response from a payers trade group.

The Chicago-based AMA, in its "Competition in Health Insurance: A Comprehensive Study of U.S. Markets" 2012 report, states, "It appears that consolidation has resulted in the possession and exercise of health insurer monopoly power."

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This is the first year that the study analyzed insurer competition among markets. The research covered 385 metro areas across the country and compiled three lists that ranked the states with the least competitive HMO (PDF), PPO (PDF) and commercial health insurance markets (PDF). Alabama and Rhode Island were the only states to appear in the top 10 on all three of the AMA's "least competitive" lists. Nebraska was the only state that appeared on two top 10 lists, making the rankings for the least-competitive HMO and commercial health insurance markets.

The report also stated that in 67% of metro areas, at least one insurer held an HMO market share of at least 50%. In 68% of metro areas, at least one insurer held a PPO market share of at least 50%. The same percentage applied to point-of-service plans: In 68% of metro areas, at least one insurer held a market share of at least 50%.

"The broad scope of the new AMA analysis provides the most complete picture of the consolidation trend in health insurance markets," AMA President Dr. Jeremy Lazarus said in a news release about the report. "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."

America's Health Insurance Plans issued a statement in response calling the study's data "limited and unreliable."

"This is the same fatally flawed study that has consistently been debunked by leading healthcare economists," AHIP's statement read. The insurers group reiterated its stance that provider consolidation is inflating the costs of healthcare. AHIP asserts that health plan consolidation can bring down prices for consumers by countering hospitals' increased market power.

Health insurers have been focusing their deal-making on expanding their footprints in Medicaid managed care, an area in which states are likely to significantly increase spending as they increase Medicaid eligibility under the Patient Protection and Affordable Care Act. The U.S. Justice Department on Wednesday paved the way for just such a move for WellPoint. Amerigroup agreed to sell its Virginia division to Inova Health System to resolve the government's concerns that the merger would create a monopoly in Medicaid managed care in Northern Virginia.

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