Insurance markets are still highly concentrated, AMA says
The share of commercial markets that are highly concentrated was 95% in both 2014 and 2023, not changing much in that span.
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Dominant health insurers in most metropolitan areas across the U.S. have consolidated significant market share and driven away competition, leaving consumers in local markets with a decade of very limited options for medical coverage, according to a new market analysis from the American Medical Association.
The 2024 edition of Competition in Health Insurance: A Comprehensive Study of US Markets examined 382 metropolitan statistical areas (MSAs), the 50 states and Washington, D.C., and tabulated commercial and Medicare Advantage market shares for the two largest health insurance companies in each of those geographic markets.
It also analyzed state-and MSA-level market concentration according to measures used in federal merger guidelines issued in December 2023. Markets that exceed a regulatory threshold set by federal guidelines are considered "highly concentrated" and lack adequate health insurer competition.
The analysis calculated changes in MSA-level commercial market concentration between 2014 and 2023, and found health insurance markets have remained stubbornly highly concentrated over time, with the vast majority being so designated within the last 10 years.
The share of commercial markets that are highly concentrated was 95% in both 2014 and 2023, and hovered between 95% and 96% in that 10-year period. And competition and choice have continued to fade for many patients, as almost half (49%) of markets that were highly concentrated in 2014 grew more consolidated by 2023.
WHAT'S THE IMPACT?
In 89% of MSAs, at least one insurer held a commercial market share of 30% or greater, and in 47%, one insurer's share was at least 50%, the analysis showed.
A Blue Cross Blue Shield (BCBS) insurer had the largest state-level market share in 41 states, and the largest MSA-level market share in 83% of MSAs. Elevance Health (formerly Anthem) had the largest MSA-level market share in 21% (80) of MSAs.
At the national level, UnitedHealth Group was the largest commercial health insurer by market share in the U.S., and Centene was the largest insurer by market share in the exchanges.
The 10 states with the least competitive commercial health insurance markets were, in descending order: Alabama, Kentucky, Michigan, Louisiana, Hawaii, Illinois, Alaska, Delaware, Vermont and South Carolina.
Medicare Advantage markets are also highly concentrated, the survey found, and have remained so over time. In 2023, 97% of MSA-level MA markets were highly concentrated, and this proportion has hovered between 97% and 99% since 2017. Interestingly, as in commercial markets, UnitedHealth Group is also the largest insurer in the MA market, with a national-level share of 29% – up from 25% in 2017. Locally, it had the largest MSA-level market share in 43% of MSAs.
THE LARGER TREND
The AMA has been sounding the bell on insurer consolidation for some time, calling out the trend in last year's report, in which it found that 73% of MSA-level markets were highly concentrated in 2022, up from 71% in 2014.
The AMA's 2022 report showed Medicare Advantage markets becoming less concentrated, but said this masks some merger activity that took place. Notable among these was Centene's acquisition of WellCare. Although both insurers provided MA coverage in several states prior to the merger, with a few exceptions their market shares were small and there was not a lot of significant market overlap. So, while the merger generally did not have large effects at the local level, it increased Centene's share at the national level, from 1% to 4%, and moved it up the rankings, from 10th to sixth, between 2017 and 2021.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
