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Study reveals health insurance markets are out of balance
e-Reports, March 8, 2010
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Because competition in the health insurance industry is dwindling, the AMA is urging the Department of Justice (DOJ) and state agencies to aggressively enforce antitrust laws to prohibit mergers.

Based on new research by the AMA, the two largest insurers had a combined market share of 70 percent in 24 of the 43 states surveyed. That’s an increase of six states compared to last year.

“The near total collapse of competitive and dynamic health insurance markets has not helped patients,” said AMA President J. James Rohack, M.D. “As demonstrated by proposed rate hikes in California and other states, health insurers have not shown greater efficiency and lower health care costs. Instead, patient premiums, deductibles and co-payments have soared without an increase in benefits in these increasingly consolidated markets.”

The published study, “Competition in Health Insurance: A Comprehensive Study of U.S. Markets,” analyzed 43 states and 313 metropolitan markets against an index used by federal regulators for measuring market concentration.

Enrollments in private health maintenance organizations and preferred provider organizations were reviewed and showed that:

  • About 99 percent of metropolitan markets are “highly concentrated” based on federal merger guidelines.
  • In 54 percent of metropolitan markets, at least one insurer had a market share of 50 percent or greater.
  • In 92 percent of the metropolitan markets, at least one insurer had a market share of 30 percent of greater.

The AMA has asked the DOJ to:

  • Perform a retrospective study of health insurance mergers similar to that performed by the Federal Trade Commission on hospital mergers
  • Commission new research to identify causes and consequences of health insurer market power
  • Create a system for predicting the effects health insurer mergers will have on consumer and provider markets

AMA members can order a free copy of the study here or by calling (800) 621-8335 and mention AMA Bookstore item number OP427109. Non-members may purchase the study for $150.

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