HEALTH CARE CHOICES ARE NARROWING
April 19, 2006
Consolidation among health insurers has led to near-monopolies and oligarchies in most regions of the United States, according to an American Medical Association (AMA) study released Monday.
The study used the Department of Justice (DOJ) system called the Herfindahl-Hirschman Index, which measures antitrust concerns. A score above 1,000 on the index shows "moderate" market concentration and a score above 1,800 shows "high" market concentration.
According to the study, which is based on 2005 data, 56 percent of 294 metropolitan areas studied have single insurers that control more than 50 percent of business in HMO and PPO underwriting.
According to researchers:
- Based on the index, 95 percent of the metropolitan areas scored higher than 1,800. Sixty-seven percent of metropolitan areas scored above 3,000.
- Additionally, each of 43 states studied was measured as having a "high" market concentration.
- North Dakota was among the states with the highest market concentrations, with about 90 percent of its market controlled by the state's Blue Cross Blue Shield provider.
- Blue Cross Blue Shield of Alabama controlled more than 90 percent of the market in parts of Alabama.
AMA says there have been more than 400 health care insurance mergers during the past decade. Health insurers following consolidations have presumably eliminated duplicative functions, but they're not passing the savings in personnel and administrative costs on to consumers. Rate increases are slowing, but they are higher than ever and growing at a near double-digit pace. AMA says it raised antitrust issues with the DOJ, which it said did not express interest in pursing the matter.
Source: Victoria Colliver, "Insurers' mergers limiting options; Health care choices are narrowing, says study by AMA," San Francisco Chronicle, April 18, 2006; and Associated Press, "Health Insurers Are Near-Monopolies," Baltimore Sun, April 17, 2006.
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