Health Insurer Competition Absent, AMA Says

John Commins, for HealthLeaders Media , February 3, 2011

Most commercial health insurance markets in the United States are dominated by one or two health insurers, according to report this week by the American Medical Association.

The 2010 edition of Competition in Health Insurance: A Comprehensive Study of U.S. Markets found that 99% of health insurance markets in the U.S. are “highly concentrated,” based on the 1997 U.S. Department of Justice and Federal Trade Commission Horizontal Merger Guidelines. This indicates a significant absence of competition among insurers. In 48% of metropolitan statistical areas, at least one insurer had a market share of 50% or more, AMA reported.

“The market power of health insurers places physicians and patients at a significant disadvantage,” said AMA President Cecil B. Wilson, MD. “When insurers dominate a market, people pay higher health insurance premiums than they should, and physicians are pressured to accept unfair contract terms and corporate policies, which undermines the physician role as patient advocate.”

Robert Zirkelbach, press secretary for America’s Health Insurance Plans, disputed the findings. “Competition is vigorous among health plans across the country,” he said. “They operate in highly competitive markets in which consumers have numerous choices among plan types and insurers.  Moreover, research examining competition in healthcare markets increasingly points to provider consolidation as a significant factor contributing to rising healthcare costs.”

AMA said the concentration of health plans is in stark contrast to that of physicians, who it said are the least concentrated segment of the health care sector, with 78% of office-based physicians working in practices with nine physicians or less. Most of those are in either solo practices or practices of two to four physicians.

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2 comments on "Health Insurer Competition Absent, AMA Says"

Todd (2/4/2011 at 11:11 AM)
This is the same old argument from the AMA. When are these physicians going to stop appealing to the popular belief even when its fallacious? Doctors know the high cost of private insurance and the subsequent consolidation in the marketplace is largely due to the cost shifting required by providers due to the underpayment by medicare and medicaid.

bluetooth (2/3/2011 at 10:11 AM)
THE ELEPHANT IN THE ROOM. Sadly this article ignores the fundamental driver of health insurance premiums (cost of care) and goes down the rabbit trail of the AMA's red herring of "market share." And no evidence is cited about the AMA claim of members' "higher insurance premiums than they should." To blame insurers for high premiums without addressing the underlying exorbitant and skyrocketing cost of medical care is like blaming the gas station for high gas prices rather than the cost of oil. And according to PriceWaterhouseCoopers, health insurers average 3% profit margin...what do you think physicians' margins are? (Wait for it.)




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