Highly concentrated markets for commercial health insurance have grown even more concentrated over the past five years, according to a new study from the American Medical Association.
The AMA's "Competition in Health Insurance: A Comprehensive Study of U.S. Markets" analyzed market concentration in all 384 metropolitan statistical areas, the 50 states, and Washington, D.C., using the Herfindahl-Hirschman Index. Federal guidelines classify markets with a Herfindahl-Hirschman Index score of more than 2,500 points as "highly concentrated."
Eight key findings:
1. Roughly half of the commercial health insurance markets that were highly concentrated in 2014 became even more concentrated by 2019.
2. The share of highly concentrated markets rose from 71 percent in 2014 to 74 percent in 2019.
3. The average metropolitan statistical area market scored 3,473 on the Herfindahl-Hirschman Index, exceeding the federal benchmark for a highly concentrated market by nearly 1,000 points.
4. Between 2014-19, the average market Herfindahl-Hirschman Index score increased by 151 points.
5. Fifty-six percent of markets experienced an increase in their Herfindahl-Hirschman Index score during that time. The average increase among these markets was 481 points.
6. In 17 percent of commercial health insurance markets, the score increased by at least 500 points.
7. In 92 percent of metropolitan statistical area markets, a single insurer held market share of at least 30 percent.
8. In 48 percent of metropolitan statistical area markets, a single insurer held market share of 50 percent or greater.
"The prospect of future consolidation in the health insurance industry should be viewed in the context of the low levels of competition in most health insurance markets," the AMA said in a press release. "For nearly 20 years, the AMA study has been a helpful resource to researchers, lawmakers, policymakers and regulators as they work to identify markets where future consolidation among health insurers may cause competitive harm to patients."
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