A new study shows that anticompetitive market power is widespread for each of the three most popular managed health care plans in the United States, and it's hurting both patients and physicians while contributing to higher health costs.
The report, issued by the American Medical Association, found that a "significant absence of health insurer competition" is present in 70 percent of metropolitan areas. The AMA's annual health insurance market analysis for the first time examines insurer competition in the markets for point-of-service plans, in addition to its annual analysis of health maintenance organizations and preferred provider organizations.
The study, which looked at 385 metropolitan areas in all 50 states, said that about 68 percent of the metropolitan areas studied by the AMA had one insurance company with a combined market share of 50 percent or more among HMOs, PPOs and POSs.
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"The broad scope of the new AMA analysis provides the most complete picture of the consolidation trend in health insurance markets," says AMA President Jeremy Lazarus. "The new data demonstrate that most areas of the country have a single health insurer with an anticompetitive share of the HMO, PPO or POS market."
Alabama, Hawaii and Michigan have the least competitive commercial health insurance markets.
In each of the 10 least competitive states, a single insurer accounted for a majority share of the health insurance market. For example, in Alabama a single insurer accounted for 88 percent of the state's health insurance market.
"It appears that consolidation has resulted in the possession and exercise of health insurer monopoly power," the study notes, pointing to increased premiums, watered-down benefits and insurers' growing profitability as evidence that highly concentrated markets harm patients and physicians.
The health insurance industry, for its part, took issue with AMA's study calling the data "limited" and "unreliable."
"Families and employers in every state have multiple choices of both insurance plans and types of coverage," America's Health Insurance Plans President and CEO Karen Ignagni said in a statement. "Moreover, research clearly demonstrates that provider consolidation—not concentration of health plan markets—is driving up health care costs for consumers and employers."
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