What are the news: A new review of Medicare Advantage markets in 380 metropolitan statistical areas (MSAs) found that 79% had low levels of competition, with those markets at the local level classified as “highly concentrated” under federal guidelines.
The 2022 edition of “Competition in Health Insurance: A Comprehensive Study of US Markets” (PDF) for the first time examines Medicare Advantage markets in 380 Metropolitan Statistical Areas (MSAs) and presents market shares and concentration levels of the market of the two largest insurers as measures of competition.
With the addition of Medicare Advantage Markets, the AMA’s annual study continues to provide the broadest and most comprehensive picture of competition in health insurance markets for metropolitan areas nationwide, as well as than for the 50 states and the District of Columbia. In addition to Medicare Advantage enrollment, the study is based on 2021 data captured from commercial enrollment in preferred provider organizations, health maintenance organizations, point-of-care, plans consumer-oriented health and public health exchanges.
Similar to Medicare Advantage, the vast majority of commercial markets at the MSA level are also highly concentrated. Three out of four MSAs had commercial markets with low levels of competition, as these markets at the local level were classified as “highly concentrated” under federal guidelines.
The study notes that insurers held large market shares in the commercial and Medicare Advantage markets. According to the latest data, UnitedHealth Group is the largest insurer in both markets and CVS Health (owner of Aetna) is the third largest in both markets.
Why it matters: “High levels of market concentration can lead to diminished competitive constraints on insurers,” said AMA Chairman Jack Resneck, Jr., MD. “The unchecked market power of insurers is a formula for higher premiums, lower coverage, and inadequate levels of patient care, concerns of great importance to Medicare Advantage.
“Most of the big Medicare Advantage insurers are accused of fraud and flouting the authority of federal agencies,” Dr. Resneck added. “The AMA’s new study sheds light on the lack of competition in Medicare Advantage markets across the country and will help regulators and legislators better examine anti-competitive behavior by insurers that harms patients and physicians in an industry where abusive business practices are already commonplace.”
Learn more: Here are some other highlights from the study, with additional information available on the AMA Competition in Health Care Research website.
In commercial markets:
- Forty-eight percent of MSA-level markets had an insurer with a share of 50% or more. Eleven percent of MSA-level markets had an insurer with a share of 70% or more.
- The 10 states (PDF) with the least competitive business markets were: 1. Alabama, 2. Michigan, 3. Louisiana, 4. Hawaii, 5. South Carolina, 6. Kentucky, 7. Alaska, 8. Illinois, 9 Vermont, and 10. Delaware. See the 10 states with the least competitive exchange (PDF) markets.
In Medicare Advantage markets:
- Thirty-four percent of MSA-level markets had an insurer with a share of 50% or more. Six percent of markets at the MSA level had an insurer with a share of 70% or more.
- The 10 states (PDF) with the least competitive Medicare Advantage markets were: 1. Vermont, 2. North Dakota, 3. Wyoming, 4. Montana, 5. Rhode Island, 6. South Dakota, 7. West Virginia , 8. District of Columbia, 9. Nebraska and 10. Louisiana.
The study is a vital part of the AMA’s ongoing antitrust advocacy to protect patients and physicians from competitive harm. Concentration in the health insurance market will continue to be a vital public policy issue for the AMA, the Federation of Medicine and the country’s patients and physicians.
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