The few and the powerful continue to dominate many highly concentrated health insurance markets, reducing competition and choices for patients.
Based on federal merger guidelines in place in early December, nearly three-quarters (73%) of 381 metropolitan statistical area (MSA)-level commercial health insurance markets were highly concentrated in 2022, up from 71% in 2014, according to the AMA’s latest examination. Under the updated U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC) guidelines released Dec. 18, 95% were highly concentrated in 2022. In 48% of MSAs, one health insurer held a market share of at least 50%.
The 2023 edition of Competition in Health Insurance: A Comprehensive Study of U.S. Markets examines 381 MSAs, the 50 states and the District of Columbia, calculating market shares for the two largest health insurers. It also includes measures of state and MSA-level market concentration.
AMA researchers used the Herfindahl-Hirschman Index (HHI) to measure market concentration and competition. A “highly concentrated” market exceeds a regulatory threshold for the HHI set by federal guidelines and lacks adequate health insurer competition. Over half of markets, 57%, saw HHI increases between 2014 and 2022.
“High market concentration tends to lower competition among health insurers, which can harm patients by raising insurance premiums above competitive levels,” said AMA President Jesse M. Ehrenfeld, MD, MPH.
The AMA backed the draft federal guidelines from the DOJ and FTC to lower the regulatory threshold for markets to be considered highly concentrated “to reverse the trend toward health insurance consolidation,” Dr. Ehrenfeld added.
The guidelines represented “the proper prescription to scrutinize and potentially limit harmful insurance mergers,” he said.
Blues remain largest in commercial markets, UnitedHealth’s the giant in MA
A Blue Cross Blue Shield (BCBS) insurer had the largest state-level market share in 41 states. A BCBS insurer also had the largest MSA-level market share in 82% of MSAs. Most notable among these was Elevance Health (formerly Anthem), which had the largest MSA-level market share in 22% of MSAs.
Nationally, UnitedHealth Group was the largest commercial health insurer and Centene was the largest insurer in the insurance exchanges.
Among Medicare Advantage plans, UnitedHealth Group had the largest MSA-level market share in 42% of MSAs and Humana was the largest insurer in 22% of MSAs.
Here are some other highlights from the study. Additional insights are available at the AMA’s Competition in Health Care Research website.
In commercial markets at the national level, the 10 largest health insurers by market share were:
- UnitedHealth Group (14%).
- Elevance Health (12%).
- CVS (Aetna) (11%).
- Cigna (10%).
- Kaiser Permanente (7%).
- Health Care Service Corp. (6%).
- Blue Cross Blue Shield of Michigan (2%).
- Blue Cross Blue Shield of Florida (2%).
- Blue Shield of California (2%).
- Highmark (2%).
In Medicare Advantage markets:
- Under previous federal guidelines, 71% of MSA-level markets were highly concentrated in 2022, down from 87% in 2017. Under the new DOJ and FTC guidelines, 97% of MSA-level markets are highly concentrated.
- In 31% of MSAs, one health insurer held a market share of at least 50%.
In public health exchange markets:
- Under previous federal guidelines, 90% of MSA-level markets were highly concentrated in 2022, down from 95% in 2014. Under the new federal guidelines, 99% of MSA-level markets are highly concentrated.
- In 67% of MSAs, one health insurer held a market share of at least 50%.
The states with the least competitive commercial health insurance markets in 2022 were: Alabama, Michigan, Louisiana, Kentucky, Hawaii, South Carolina, Alaska, Illinois, Delaware and Vermont.
