The 2023 edition of Competition in Health Insurance: A Comprehensive Study of U.S. Markets looked at 381 metropolitan statistical areas (MSAs), across 50 states and Washington D.C. To be considered “highly concentrated,” markets had to exceed a regulatory threshold set by federal guidelines.
Focusing on data ranging from 2014 through 2022, the study found that 73% of commercial markets at MSA levels were highly concentrated in 2022, an increase from 71% in 2014. The study also found that concentration was on the rise, with more than half (53%) of the markets that were already highly concentrated in 2014, becoming even more so by 2022.
Moreover, with current proposed federal guidelines, 95% (363) of MSA-level markets would be highly concentrated.
The study shows that over time not much has changed for the biggest names on the list. In fact, the top four insurers had identical rankings in both 2014 and 2022. In both years, UnitedHealth Group had the largest market share: 16% and 14%, while Elevance Health (formerly Anthem) came second with shares of 13% and 12%.
The study also found that of 48% MSAs, just one health insurer held a market share of at least 50%.
Nationally, the top ten largest health insurers by market share were:
- UnitedHealth Group (14%)
- Elevance Health (12%)
- CVS (Aetna) (11%)
- Cigna (10%)
- Kaiser Permanente (7%)
- Health Care Service Corp. (6%)
- Blue Cross Blue Shield of Michigan (2%)
- Blue Cross Blue Shield of Florida (2%)
- Blue Shield of California (2%)
- Highmark (2%)
The study examined exactly how these anticompetitive practices lead to harmful effects in the system. “When an insurer exercises market power in its output market (the sale of insurance coverage), premiums are higher and quantity of coverage is lower than in a competitive market… When an insurer exercises market power in its input market (e.g., physician services), payments to providers and the quantity of health care are below competitive levels,” the study stated.
AMA President Jesse M. Ehrenfeld, M.D., M.P.H. wrote about how the high concentration of the markets is detrimental to both providers and consumers. “Reversing the trend toward consolidation in health insurance markets is the right prescription to cut exorbitant health care costs, improve outcomes and boost the quality of care,” Ehrenfeld wrote.
Ehrenfeld went on to state that the AMA supports guidelines that were proposed earlier this year by the Federal Trade Commission and the Depart of Justice to limit mergers amongst payers. These guidelines would call for more careful examination of mergers and acquisitions and would work to limit future consolidations.
Overall, this study presents evidence to confirm that insurers are creating a highly concentrated market with their anticompetitive behavior and exercise of market power, which is in turn, causing great harm to consumers and care providers.
