AMA: High Concentration in Insurance Markets
By Joey Berlin


Most U.S. commercial health insurance markets are “highly concentrated” among the top insurers in those markets, and evidence strongly suggests insurers are “causing competitive harm to consumers and providers of care.”  

Those were the findings of the American Medical Association’s 2021 update to its annual study, Competition in Health Insurance

The AMA study, which analyzes market concentration at the state level and in all 384 metropolitan statistical areas in the U.S. as defined by the federal Office of Management and Budget, found that the markets in 73% of those areas were highly concentrated in 2020. 

In 40 states, including Texas, a Blue Cross and Blue Shield (BCBS) affiliate had the largest market share. In Texas, Health Care Service Corporation – which owns Blue Cross and Blue Shield of Texas – controls 37% of the state market. That percentage share for Texas’ largest insurer ranks the state 36th in the nation. Health Care Service Corporation is the largest insurer in 24 of the 25 metropolitan statistical areas in the Lone Star State (the only exception was Killeen, where Baylor Scott & White was the top insurer). 

“High concentration levels in health insurance markets are largely the result of consolidation (i.e., mergers and acquisitions), which can lead to the exercise of market power and, in turn, harm to consumers and providers of care,” AMA researchers wrote. “Both consummated and proposed consolidation of health insurers should raise serious antitrust concerns. Conceptually, mergers and acquisitions can have beneficial and harmful effects on consumers. However, only the latter has been observed. It appears that consolidation has resulted in the possession and exercise of health insurer monopoly power – the ability to raise and maintain premiums above competitive levels – instead of the passing of any benefits obtained through to consumers.” 

Overall, a BCBS affiliate had the largest market share in 81% of the metropolitan statistical areas. UnitedHealth Group was the largest commercial health insurer nationally, with 15% of the market share. However, the report notes that health insurance markets “are generally local” and the national numbers “mask the findings at the local … level, where market shares are significantly higher.” 

The study compared market concentration in 2020 to the 2014 data, showing 57% of markets experienced an increase in concentration between those years. 

Highly concentrated markets “are ripe for the exercise of health insurer market power, which harms consumers and providers of care. Our findings should prompt federal and state antitrust authorities to vigorously examine the competitive effects of proposed mergers involving health insurers,” AMA researchers urged. 

 Tex Med. 2022;118(2):24
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Last Updated On

March 31, 2022

Originally Published On

October 25, 2021

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