CHICAGO – The American Medical Association (AMA) announced today that the share of highly concentrated markets in the commercial health insurance industry has increased from 71 to 75 percent between 2014 and 2018. These estimates are from the AMA’s annual assessment of market concentration in the health insurance industry: Competition in Health Insurance: A Comprehensive Study of US Markets. Based on enrollment data used in the newly released AMA study, an estimated 73 million Americans with commercial health insurance live in highly concentrated markets and face limited choice. 

“Americans in three-quarters of commercial health insurance markets have a limited number of health insurers from which to choose.” said AMA President Patrice A. Harris, M.D., M.A. “In almost half of metropolitan areas, a single health insurer has 50 percent or more of the market, and patients are not benefitting from this degree of market power. While health insurers grow corporate profits, networks are too narrow, premiums are too high, and benefits are too watered down.”

The 2019 edition of Competition in Health Insurance: A Comprehensive Study of U.S. Markets analyzed market concentration in 382 metropolitan statistical areas (MSAs), all 50 states and the District of Columbia using the Herfindahl-Hirschman Index (HHI). Markets that exceed an HHI of 2500 points are “highly concentrated” according to the federal antitrust guidelines – they have a lack of adequate health insurer competition.

According to the study, 75 percent of 382 MSA-level markets were highly concentrated. The average MSA-level market had an HHI of 3504 - more than 1000 points over the federal threshold for a highly concentrated market. Widespread market concentration reflects the fact that 91 percent of MSA-level markets had a single insurer with a market share of at least 30 percent. 

Several of the study’s findings point to worsening conditions. Market concentration levels increased between 2014 and 2018 with the average market HHI rising by 145 points. Fifty-eight percent of markets experienced an increase in the HHI, and in 20 percent of markets the increase was at least 500 points. In markets with a rise in the HHI, the average increase was 498 points.

The study found evidence of increases in concentration in MSA-level markets that were already highly concentrated in 2014, as well as in markets that were not. More than half (54 percent) of the markets that were already highly concentrated became even more so in 2018. Twenty-seven percent of the markets that were not highly concentrated in 2014 experienced an increase in the HHI large enough to place them in the highly concentrated category in 2018.

The broad scope of the AMA study presents the most complete picture of commercial market concentration in the health insurance industry by separately examining competition levels in product-specific markets, including health maintenance organizations (HMO), preferred provider organizations (PPO) and point-of-service (POS) plans, consumer-driven health plans (CDHP) and public health exchanges.

The prospect of future consolidation in the health insurance industry should be viewed in the context of the low levels of competition in most health insurance markets. The AMA study is intended to help researchers, policymakers and regulators identify markets where future consolidation among health insurers may cause competitive harm to patients.

The AMA’s latest study of competition in the health insurance industry shows:

• The 10 states with the least competitive commercial health insurance markets were: 1. Alabama, 2. Louisiana, 3. Hawaii, 4. Delaware, 5. South Carolina, 6. Michigan, 7. Alaska, 8. Kentucky, 9. North Dakota, and 10. Illinois. See the 10 states with the least competitive HMO, PPO, POS or exchange markets.
• The 10 states that experienced the largest decrease in competition levels between 2017 and 2018 were: 1. Utah, 2. Louisiana, 3. Florida, 4. New Hampshire, 5. Alabama, 6. Alaska, 7. Iowa, 8. Tennessee, 9. Massachusetts, and 10. Wyoming.
• The five health insurers with the highest market share in the most MSA-level markets were: 1. Anthem (77 MSAs), 2. Health Care Service Corp. (42 MSAs), 3. UnitedHealth Group (27 MSAs), 4. Florida Blue (22 MSAs), and 5. Highmark (21 MSAs).

Competition in Health Insurance: A Comprehensive Study of U.S. Markets is a vital element to AMA’s continued antitrust advocacy to protect patients and physicians from competitive harm. Health insurance market concentration will continue to be a vital issue of public policy for the AMA, the federation of medicine, and the nation’s physicians and patients. The 2019 updated study is available for download from the AMA’s Competition in Health Insurance website.