Amid a flurry of merger activity in the health insurance industry, a new report says 70 percent of the commercial insurance markets are “highly concentrated,” threatening consumer choice of doctors and contributing to higher health care costs.
The report, issued by the American Medical Association, comes as health insurance companies are on the verge of taking an even greater role in providing coverage for millions more Americans. The Affordable Care Act signed into law two years ago by President Obama will begin in just 13 months providing subsidies to uninsured individuals and small employers to buy commercial coverage.
“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,” said AMA president Dr. Jeremy Lazarus.
The report mentioned most health insurers, including UnitedHealth Group (UNH), Aetna (AET), Cigna (CI), Humana (HUM), Wellpoint (WLP) and an array of Blue Cross and Blue Shield plans contributing to what the AMA described as significant market concentration.
Health insurance companies and employers that hire them hold significant sway over patient choices of doctors and hospitals through their preferred doctor lists known as networks. Doctors worry that consolidation has hurt patient choice and added to rising health insurance premiums.
“Coupled with the concomitant large increases in premiums, insurer profitability, lower scope of benefits and high barriers to entry, this strongly suggests that health insurers are exercising market power in many parts of the country and in turn causing competitive harm to consumers and providers of care,” the report says.
For its part, the health insurance industry took issue with the report, saying it is similar to prior AMA studies including one linked here that called the doctors’ analysis “unreliable” with “significant limitations.”
“Families and employers in every state have multiple choices of both insurance plans and types of coverage,” said Robert Zirkelbach, spokesman for health insurance industry lobby, America’s Health Insurance Plans. “Moreover, research clearly demonstrates that provider consolidation – not concentration of health plan markets – is driving up health care costs for consumers and employers.”