Medicare Advantage market got more competitive in 2022: AMA

The majority of the nation's health insurance markets remain highly concentrated, but one segment of the industry in particular continues to grow more competitive—Medicare Advantage.

The Medicare Advantage market has decreased in concentration since 2017 and continued to do so in 2022, according to the American Medical Association's annual report Tuesday on health insurers. Among metropolitan statistical areas surveyed last year, 71% were considered highly concentrated for Medicare Advantage, compared with 79% in 2021 and 87% in 2017, the AMA found. A single carrier held at least half of the Medicare Advantage market share in 31% of metropolitan areas in 2022.

Related: Merger guidelines update would increase scrutiny of healthcare deal

For the commercial health insurance market last year, 73% of areas surveyed lacked a competitive market, down 2 percentage points from 2021. At least one insurer held at least 30% of the commercial market share in 90% of areas, and a single insurer accounted for at least 50% of the market share in nearly half of markets.

For the health insurance exchanges, 90% of the market was deemed highly concentrated last year, and one carrier held at least half the market share in 67% of areas.

A lack of competition among insurers in a market can affect patients and providers. In releasing its study, the AMA called on the Federal Trade Commission and Justice Department to continue scrutinizing vertical and horizontal consolidation among payers.

“High market concentration tends to lower competition among health insurers, which can harm patients by raising insurance premiums above competitive levels,” AMA President Dr. Jesse Ehrenfeld said in a news release.

Elevance Health, which manages Blue Cross and Blue Shield plans in 14 states, was the largest health insurer by commercial market share in 22% of areas surveyed. Health Care Service Corp, which sells Blue Cross and Blue Shield plans in Illinois, Montana, New Mexico, Oklahoma and Texas, came in second with the market share lead in 11% of areas, followed by Highmark with leading market share in 6% of regions.

UnitedHealth Group was the largest commercial and Medicare Advantage insurer nationally while Centene Corp. was the largest exchange insurer. Blue Cross Blue Shield insurers owned the largest state-level market share in 41 states, and Blues plans owned the greatest market share in 82% of metropolitan areas.

The AMA report, which examined 381 metropolitan statistical areas, the 50 states and the District of Columbia, is updated annually to help researchers, policymakers and regulators identify markets where deals involving insurers could limit competition to providers and patients.

The FTC and DOJ released draft merger guidelines in July designed to limit deals across various industries, including healthcare, that constrain labor markets and stifle competition.

The revised guidelines would decrease the threshold for markets considered highly concentrated. The AMA has said it supports the draft federal guidelines.