Mergers Among Health Insurers Limiting Consumers' Choice of Care, Providers


Apr 18 2006 - 8:12pm

Health Insurance Providers and Consumers

Consolidation among health insurers has led to near-monopolies and oligarchies in most regions of the U.S., according to an American Medical Association study released on Monday, Dow Jones/Baltimore Sun reports. The study used the Department of Justice 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% of 294 metropolitan areas studied have single insurers that control more than 50% of business in HMO and PPO underwriting. The study finds that, based on the index, 95% of the metropolitan areas scored higher than 1,800. Sixty-seven percent of metropolitan areas scored above 3,000. In addition, 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% of its market controlled by the state's Blue Cross Blue Shield provider (Dow Jones/Baltimore Sun, 4/18). Blue Cross Blue Shield of Alabama controlled more than 90% of the market in parts of Alabama (Colliver, San Francisco Chronicle, 4/18).

AMA said 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," Dow Jones/Sun reports. Rate increases are slowing, but they "are higher than ever and growing at a near double-digit pace," Dow Jones/Sun reports. AMA said it raised antitrust issues with DOJ, which it said did not express interest in pursing the matter, Dow Jones/Sun reports (Dow Jones/Baltimore Sun, 4/18).

Reaction from health insurance industry

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