Highly concentrated markets in the commercial health insurance industry are on the rise, leaving millions more Americans with limited choices when it comes to getting coverage, according to the American Medical Association.
From 2014 to 2018, the share of these concentrated markets rose from 71% to 75%, found AMA’s annual assessment of market concentration in the health insurance industry, “Competition in Health Insurance: A Comprehensive Study of U.S. Markets.” The rise means an estimated 73 million Americans with commercial health insurance are facing limited choice in one of these markets, which are defined as having a Herfindahl-Hirschman Index (HHI) exceeding 2,500 points.
States with the least competitive commercial insurance markets included:
- South Carolina
- North Dakota
“Americans in three-quarters of commercial health insurance markets have a limited number of health insurers from which to choose,” AMA President Patrice A. Harris, MD, MA, said in a statement. “In almost half of metropolitan areas, a single health insurer has 50 percent or more of the market, and patients are not benefitting from this degree of market power. While health insurers grow corporate profits, networks are too narrow, premiums are too high, and benefits are too watered down.”
Out of 382 MSA-level markets measured, 75% were highly concentrated, the AMA found. Theses MSA-level markets were also more than 1,000 points over the federal threshold for the highly concentrated definition, with an average of 3,504 points. A whopping 91% had a single insurer with a market share of at least 30%.
Not only were more markets highly concentrated, but concentration levels increased rapidly from 2014 to 2018, averaging a 145-point rise on the HHI. In 20% of markets, concentration rose at least 500 points over that time period.
Some states experienced more loss of competition that others. Those that experienced the largest decrease in competition levels from 2017 to 2018 were:
- New Hampshire
According to the AMA, competition is critical in the commercial health insurance space and the association’s study is vital to protect patients and physicians from competitive harm.
See the full study here.