Lack of Competition Impacts Health Insurance Costs

If you’re an individual or small business owner looking to control rising health insurance costs, lack of competition in your area may be hampering your quest, according to a new study from the American Medical Association. The AMA reports that four out of five major U.S. metro areas lack a competitive health insurance market. Competition in Health Insurance: A Comprehensive Study of U.S. Markets analyzes the commercial health insurance market in 368 metropolitan areas in 48 states for both fully insured and self-insured enrollment in HMOs and PPOs. The data excludes public programs such as Medicare and Medicaid, but includes individuals who buy their own health insurance. Here are some of the highlights:

  • The 10 least competitive health insurance markets are: Alabama; Alaska; Delaware; Michigan; Hawaii; District of Columbia; Nebraska; North Carolina; Indiana; and Maine.
  • The 10 most competitive health insurance markets are: Oregon; Missouri; Pennsylvania; Colorado; West Virginia; New York; Ohio; California; Indiana; and Maine.
  • In 24 states, two of the largest providers own more than 70% of the combined health care insurance market share; and in half of the 368 metro areas examined at least one private provider controls 50% or more of the market share.
  • 83% of the metro markets analyzed have had a substantial lack of competition since January 2009.

The AMA report attributes the lack of competition to the “anti-competitive clout” some providers have gained through aggressive mergers and acquisitions – buying up smaller competitors to control greater market share.

As reported in an article, a spokesman for the trade group America’s Health Insurance Plans, Robert Zirkelbach, agrees that provider consolidation is “a significant factor contributing to rising health care costs.”  However, he claims, states said to offer little competition actually have some of the lowest premiums in the country. Zirkelbach notes that large market share can be attributed to a company’s long-time presence in a particular market, a reputation for offering the most affordable options or a high satisfaction rate among consumers.

The bottom line? Competitive health insurance is out there. Your best bet is to shop for health insurance online and compare prices and plans.


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