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Insurance competition keeps weakening

The American Medical Association (AMA) released a new report on the concentration of a certain few health insurers. Can you guess the culprits?

It’s ironic, isn’t it? When hospitals, who are on the verge of closure following a brutal pandemic, decide that partnering with other providers is the only way to keep their doors open, insurers accuse them of monopolizing the market. But when insurance companies, who saw record profits during COVID-19, build their castles in the sky  . . . nobody raises a red flag.

Well, not nobody. There’s us, of course, and there’s the latest report by the American Medical Association (AMA). According to a recent article in Modern Healthcare, health insurance markets lack competition in both the commercial and Medicare Advantage sectors, with large health insurance companies dominating the markets in 2021.

In commercial markets, for example, 75% of the markets reviewed by the AMA are considered highly concentrated, up from 73% in 2020. Also ticking up? The number of markets where one insurance company holds more than half of the market. Competition was even weaker in MA markets. According to the article, 79% of MA markets surveyed reported low levels of competition.

AMA President Dr. Jack Resneck Jr. had some choice words in a news release: “Unchecked market power among insurers is a formula for higher premiums, lower coverage and inadequate levels of patient care.”

So, who are the biggest offenders?

  • Big ‘Ole Blue, for one. Blue Cross Blue Shield (BCBS) was the biggest insurer in 40 states and 81% of the cities reviewed in the report.
  • Anthem had the largest MSA-level market share in 21% (82) of MSAs.
  • At the national level, UnitedHealth Group was the largest commercial health insurer in the United States, while Centene was the largest insurer in the exchanges.

Too much market power in the hands of insurers is dangerous for both patients and providers. The more dominance an insurance company has over a market, the more leverage they have to raise prices for patients, reduce payments to hospitals, and minimize options for consumers.

These are all typical indicators of a monopoly. So… where are the watchdogs?

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