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.