AMA report finds less payer competition

Les Masterson

Nov. 28, 2018

Dive Brief:

• Competition among health insurers continues to drop, according to a new study from the American Medical Association.
• AMA said its research shows fewer payer competitors in 25 states in 2017 than the previous year. Payers are "exercising market power … and, in turn, causing competitive harm to consumers and providers of care."
• The states that saw the largest drops in competition between 2016 and 2017 were North Dakota, Alaska, Louisiana, Indiana and Utah. The states with the least competitive commercial health insurance markets were Alabama, Hawaii, Louisiana, Delaware and South Carolina.

Dive Insight:

The AMA said the research, "Competition in Health Insurance: A Comprehensive Study of U.S. Markets" is meant to help policymakers and regulators identify potential problems areas and where mergers may hurt patients and physicians.

The issue of less competition comes with payers seeking more integration options. In recent years, large payers like Aetna, Anthem and Cigna have looked at mergers with other large insurance companies. However, regulators have cracked down on some of those potential deals. Instead, payers are now looking more at merging with companies to build their footprints into other parts of healthcare, such as the CVS-Aetna and Cigna-Express Scripts deals.

Payer consolidation often gives insurers more market power, which can mean higher premiums and costs to members and lower provider payments. On the other hand, payers argue that these deals can improve efficiencies and lower costs overall.

AMA said in its report that 73% of payer markets are highly concentrated. The study dug into each type of plan. It found that 96% of HMO markets and 83% of PPO markets are highly concentrated. The least competitive PPO markets are Alabama, North Dakota and Hawaii. HMO markets with the least competition are Washington, Oregon and Nebraska.

"The AMA continues to urge that competition, not consolidation, is the right prescription for health insurance markets," AMA President Barbara McAneny said in a statement. "The slide toward insurance monopolies has created a market imbalance that disadvantages patients and favors powerful health insurers. The prospect of future mergers involving health insurance companies should raise serious antitrust concerns. There is already too little competition among insurers, to the detriment of patients. Networks are already too narrow, and premiums are already too high."

AMA said Anthem was the largest payer in the most metropolitan statistical area (MSA) markets. Anthem had the highest market share in 75 MSAs, which was followed by Health Care Service Corp. with 40 MSA leads and UnitedHealth Group with 27 MSAs.

Though there are fewer payers overall, the Robert Wood Johnson Foundation reported on Wednesday that there are more participants in the Affordable Care Act exchanges. The percentage of counties with only one payer in the exchanges dropped from more than 50% in 2018 to about 35% in 2019. However, that added competition might actually not be a positive for some members in exchange plans.

"In some markets, increased competition may result in a reduction in the purchasing power of subsidized consumers by narrowing the gap between the benchmark premium and plans that are cheaper than the benchmark," the report warned. "Even though the overall level of premiums may decline, potential losses to subsidized consumers in some markets will outweigh gains to the unsubsidized, suggesting that at the county level, the losers stand to lose more than the winners will win."

https://www.healthcaredive.com/news/ama-report-finds-less-payer-competition/543174/