A brand new American Medical Affiliation research finds extremely concentrated medical health insurance markets have grown much more so over the previous 5 years, a pattern the commerce group mentioned can hurt shoppers and suppliers alike.
Medical health insurance markets have been extremely concentrated in 74% of the nation’s metropolitan statistical areas in 2019, up from 71% in 2014. Greater than half of markets skilled upticks in well being insurer consolidation throughout that point, in keeping with the report, the 19th version of the AMA’s analysis on the topic.
“For lots of the 70 million People who stay in extremely concentrated medical health insurance markets, an absence of competitors is an issue that retains getting worse as shoppers have extra restricted medical health insurance choices to decide on,” AMA President Dr. Susan Bailey mentioned in an announcement.
The report used a measure referred to as the Herfindahl-Hirschman Index to find out market focus. An HHI of higher than 2,500 signifies a extremely concentrated market. Out of all 384 MSAs in 50 states plus Washington, D.C., the report discovered the typical market HHI was extremely concentrated, at three,473. The median HHI was three,176.
Between 2014 and 2019, the report discovered a median HHI enhance of 151 factors. Seventeen % of markets skilled HHI will increase of a minimum of 500 factors. Of markets that weren’t extremely concentrated in 2014, one-quarter skilled HHI upticks massive sufficient to deem them extremely concentrated by 2019.
The research broke down its outcomes by the kind of insurance coverage product, together with medical health insurance exchanges created by the Reasonably priced Care Act. Leemore Dafny, a Harvard Enterprise College professor of enterprise administration, mentioned these findings sq. with these in her personal analysis discovering much less competitors in medical health insurance marketplaces, that are backed by the federal authorities. The common HHI within the exchanges was 6,623, and 99% of them are thought of extremely concentrated, in keeping with the report.
“The alternate markets look particularly concentrated,” Dafny mentioned, “and once they’re much less aggressive, premiums go up.”
The AMA didn’t remark past its report, which inspired a dialogue amongst regulators, policymakers, lawmakers and others concerning the want for a “higher, extra open and aggressive market.”
“These markets are ripe for the train of well being insurer market energy, which harms shoppers and suppliers of care,” the report mentioned. “Our findings ought to immediate federal and state antitrust authorities to vigorously look at the aggressive results of proposed mergers between well being insurers.”
The report mentioned that 57% of physicians offering affected person care are in practices with 10 or fewer physicians. Beneath antitrust regulation, unbiased physicians cannot negotiate collectively with insurers, an imbalance that leaves most physicians with weak bargaining positions relative to business insurers, the report mentioned.
The report cited Elizabethtown-Fort Knox, Ky. for example of an already extremely concentrated market that has gotten much more concentrated over the previous 5 years. In 2014, the market had an HHI of three,534. By 2019, that had grown to five,159. That is as a result of Anthem’s market share went from 45% to 70% in that point. Anthem didn’t return a request for remark.
The report identified that medical health insurance mergers went largely unchallenged earlier than the proposed 2007 merger of Independence Blue Cross and Highmark. That deal was finally referred to as off as a result of the Pennsylvania Insurance coverage Division added a situation that certainly one of them drop its Blues model. Three years later, Blue Cross and Blue Protect of Michigan referred to as off its acquisition of Physicians Well being Plan of Mid-Michigan after the Division of Justice mentioned it could sue to dam it.
In 2015, Anthem tried to accumulate Cigna and Aetna sought to accumulate Humana. Each offers have been finally deserted after lawsuits from the DOJ and a number of attorneys normal.
America’s Well being Insurance coverage Plans, a outstanding trade commerce group, didn’t reply to a request for touch upon the report. AHIP has for years highlighted stories on rising healthcare prices that consequence from vertical supplier consolidation.
The AMA report centered on insurers, however Dafny mentioned suppliers aren’t off the hook for his or her function in driving up healthcare prices.
“Supplier costs are excessive and climbing,” she mentioned. “There’s finger pointing occurring in each instructions and I really feel just like the shoppers find yourself being the losers as a result of each supplier costs and premiums are going.”