Report Finds Majority of Payer Markets “Highly Concentrated”

A recent report by the AMA examined how payer consolidation in regional market impacts competition and found that most markets have very little competition, which could hurt consumer choices and provider care.

The report found that in 2016, one insurer has half of the market share in 43% of major American cities—an increase from 40% recorded in 2014. Additionally, the report noted that Anthem has the largest presence in the United States health insurance marketplace, with the highest market share in 82 major US cities.

“We find that the majority of US commercial health insurance markets are highly concentrated,” study authors José R Guardado, PhD, senior economist of economic and health policy research at the AMA, and Carol K Kane, PhD director of economic and health policy research, wrote. “These markets are ripe for the exercise of health insurer market power, which harms consumers and providers of care.”

Additionally, the researchers found that 69% of the country’s 389 metropolitan areas are “highly concentrate” and lack significant competition.
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Other findings noted that in 89% of cities, one or more insurers had a combined market share of 30% or more—including all HMO, PPO, POS, and ACA exchange plans. The report noted that commercial health insurance markets in 27 became more consolidated between 2014 and 2016.

The AMA stated that it hopes this report can shed light on the market domination caused by consolidation.

“After years of largely unchallenged consolidation in the health insurance industry, a few recent attempts to consolidate have received closer scrutiny than in the past, including the proposed mergers of Anthem and Cigna, as well as Aetna and Humana,” David O Barbe, MD, president of the AMA, said in a press release. “Previous versions of the AMA study played a key role in efforts to block the proposed mega-mergers by helping federal and state antitrust regulators identify markets where those mergers would cause anti-competitive harm.”—David Costill