AMA: 70% of U.S. health markets lack insurance competition

Annual report IDs least competitive health insurance markets

A new American Medical Association (AMA) report identified the least competitive health insurance markets in the United States and determined that most metropolitan areas have insurance monopolies. 

For its annual "Competition in Health Insurance: A Comprehensive Study of U.S. Markets" report, AMA examined insurance markets in 385 metropolitan areas across the United States and compiled three lists ranking states based on the competitiveness of markets for health-maintenance organization (HMO), preferred provider organization (PPO), and point-of-service (POS) plans.

The report found that a single insurer maintained a "30% or greater" share of the HMO, PPO, and POS markets in 90% of U.S. metropolitan areas. In addition, the report found that:

  • At least one insurer maintained 50% of the HMO market share in 67% of metro areas;
  • At least one insurer maintained 50% of the PPO market share in 68% of metro areas; and
  • At least one insurer maintained 50% of the POS market share in 68% of metro areas.

The report asserts that "large increases in premiums, insurer profitability, lower scope of benefits and high barriers to entry" indicate that health insurers are exercising their market power in a manner that harms competition and subsequently consumers and care providers.

The 10 states with the least insurance competition

Overall, AMA determined that the 10 states with the least competitive commercial health insurance markets are:

    1. Alabama;
    2. Hawaii;
    3. Michigan;
    4. Delaware;
    5. Alaska;
    6. North Dakota;
    7. South Carolina;
    8. Rhode Island;
    9. Wyoming; and
    10. Nebraska.

Insurers respond

According to America's Health Insurance Plans (AHIP), the report's data are "limited and unreliable."

"Families and employers in every state have multiple choices of both insurance plans and types of coverage," AHIP spokesperson Robert Zirkelbach said in a statement, adding, "research clearly demonstrates that provider consolidation–not concentration of health plan markets–is driving up health care costs for consumers and employers" (Japsen, Forbes, 11/28; Selvam, Modern Healthcare, 11/28 [subscription required]; AHIP release, 11/28; AMA release, 11/28).

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