AMA: Health plan market dominance causes competitive harm

Physicians and patients are hamstrung because of insurers’ strong hold on most metropolitan areas, according to an Association report.

By — Posted Dec. 10, 2012

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

Data collected by the American Medical Association show health insurers having dominant positions in commercial enrollment in almost every local U.S. market, putting a particular strain on physicians in small practices who don’t have the leverage to be equal negotiating partners with health plans.

In a report released Nov. 28, the AMA said 70% of 385 metropolitan areas, representing all 50 states and the District of Columbia, had “highly concentrated” health insurance markets under Dept. of Justice and Federal Trade Commission Horizontal Merger Guidelines. Those parameters are used to determine whether an acquisition will give a company an unfair and inordinate share of business. In 89% of markets, one insurer had a commercial share of 30% or greater.

Because of changes in the survey from year to year, including adjustments in Justice Dept./FTC guidelines and the inclusion for the first time of point-of-service plans this year, numbers generally are not comparable to past studies. However, in all of the 11 annual studies the AMA has released on health plan competition, insurers have exceeded the “highly concentrated” guidelines in the vast majority of markets. The AMA studies began after a spate of large mergers in the 1990s, almost all unchallenged by federal regulators, blunted competition in many health plan markets.

The 2012 edition of AMA’s Competition in Health Insurance: A Comprehensive Study of U.S. Markets, which is available for free to AMA members and for $150 to nonmembers, said insurer market concentration has meant higher premiums and decreased benefits for patients. For doctors, particularly in small practices, it has created an imbalance of power.

An insurer can push its own terms under the threat that physicians will lose a large percentage of their patients — with little chance of replacing them — if they don’t agree to the terms. The AMA report said both patients and physicians suffer “competitive harm” because of dominant plans.

“It appears that consolidation has resulted in the possession and exercise of health insurer monopoly power,” stated the study, which AMA President Jeremy A. Lazarus, MD, called “the most complete picture of the consolidation trend in health insurance markets.”

The AMA draws its information from Nashville, Tenn.-based HealthLeaders-InterStudy, which assembles data on health insurance markets. The data are as of Jan. 1, 2010. Because of that data availability, and the report’s concentration on commercial enrollment, the study does not account for a recent round of merger activity among health plans. Many of those mergers appear to be motivated by plans trying to get a larger business in government contracts as the Affordable Care Act expands Medicaid eligibility, and as an aging population increases Medicare rolls.

For example, within a six-week period in summer 2012, WellPoint said it would purchase Amerigroup, which runs many Medicaid managed care plans, for $4.9 billion, and Aetna announced it would buy Coventry Health Care, which has commercial business but also a sizable government plan presence, for $7.3 billion. Plans such as Humana and UnitedHealth Group have made smaller acquisitions of plans with large government business, and they even expanded further into health care delivery with the purchase of urgent care centers.

The trade association America’s Health Insurance Plans issued a statement calling the AMA study “fatally flawed.” AHIP repeated its contention, stated after the release of past AMA health plan studies, that “provider consolidation,” not insurer mergers, is driving up health costs. On Nov. 29, AHIP made that point as it filed a friend-of-the-court brief in the U.S. Circuit Court of Appeals in Cincinnati to support the FTC’s challenge of a proposed hospital merger in Toledo, Ohio.

However, there is some evidence that physician efforts to consolidate, or sell their practices to hospitals, are prompted by frustrations in dealing with insurer demands. For example, an Accenture survey of 204 physicians, released Oct. 31, found 87% citing business expenses as a top concern influencing their decisions to seek employment. A second issue, at 61%, was concern about dealing with health insurers.

Back to top


States where one private health plan rules

An AMA report found that individual health insurers have large enough commercial-plan market shares in 70% of 385 metropolitan areas, representing all 50 states and the District of Columbia, for the areas to be considered “highly concentrated” under federal guidelines. The AMA also broke out states (and D.C.) where a single plan had more than half of commercial enrollment, as of Jan. 1, 2010:

State Largest plan Commercial market share
Alabama Blue Cross and Blue Shield of Alabama 88%
District of Columbia Blue Cross Blue Shield (CareFirst) 72%
Hawaii Hawaii Medical Service Assn. (BCBS) 69%
Michigan Blue Cross Blue Shield of Michigan 69%
Delaware Blue Cross Blue Shield Delaware* 66%
Alaska Premera Blue Cross 62%
North Dakota BlueCross BlueShield of North Dakota 60%
South Carolina BlueCross BlueShield of South Carolina 60%
Indiana Anthem BlueCross BlueShield (WellPoint) 56%
Illinois Blue Cross Blue Shield of Illinois (HCSC) 55%
Nebraska Blue Cross and Blue Shield of Nebraska 55%
Rhode Island Blue Cross & Blue Shield of Rhode Island 55%
Wyoming Cigna 55%
Maine Anthem BlueCross BlueShield (WellPoint) 53%
New Hampshire Anthem BlueCross BlueShield (WellPoint) 51%

* In July 2012, name changed to Highmark Blue Cross Blue Shield Delaware to reflect affiliation with Pittsburgh-based Highmark.

Source: Competition in Health Insurance: A Comprehensive Study of U.S. Markets, 2012 update, American Medical Association, based on data from HealthLeaders-InterStudy

Back to top

External links

Ordering information for Competition in Health Insurance: A Comprehensive Study of U.S. Markets, 2012 update, American Medical Association; free to members, $150 for nonmembers (link)

AHIP response to AMA health insurance market study (link)

Back to top



Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story

Read story


American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story

Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story

Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story

Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story

Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story

Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story

Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn