Health plans are taking the heat this week with Sen. Charles Grassley's (R-Iowa) demand for an explanation for Wellmark's rate hike in Iowa and the American Medical Association's new report showing health plans face too little competition nationwide.
These events follow a Department of Health and Human Services report, released earlier this month, citing double-digit rate hikes is several states. And on Feb. 10, the Obama administration asked Anthem Blue Cross to defend its 39 percent rate hike in California.
The AMA report, released Tuesday, found that the largest insurers had a combined market share of 70 percent or more in 24 of the 43 states surveyed. Last year's report showed 18 of 42 states had two insurers with a combined market share of 70 percent or more.
"The near total collapse of competitive and dynamic health insurance markets has not helped patients," said AMA President J. James Rohack, MD.
"As demonstrated by proposed rate hikes in California and other states, health insurers have not shown greater efficiency and lower healthcare costs," Rohack said. "Instead, patient premiums, deductibles and co-payments have soared without an increase in benefits in these increasingly consolidated markets."
AMA researchers said they analyzed 43 states and 313 metropolitan markets against an index used by federal regulators for measuring market concentration and found that 99 percent of metropolitan markets are "highly concentrated." According to the federal index, these markets are the most likely to face harmful on patients, physicians, employers and the economy if insurance companies consolidate.
The study also found that in 54 percent of metropolitan markets, at least one insurer had a market share of 50 percent or greater, up from 40 percent of metropolitan markets last year.
Rohack said the AMA has urged the Department of Justice and state agencies to more aggressively enforce antitrust laws that prohibit harmful mergers.
The recent pressure on health plans has come mainly from Democrats, with Grassley's letter to Wellmark marking one of the first GOP attacks on the industry. Grassley, ranking member of the Senate Finance Committee, has said he believes current health reform bills under consideration will contribute to premium rate hikes.
Grassley's Monday letter to Wellmark asked why the company intends to raise rates in Iowa as much as 22 percent on April 1.
"I'm asking because Iowa consumers deserve to know, and as the healthcare debate in Washington continues, insurance rate increases are a major issue," he said.
Responding to recent attacks, America's Health Insurance Plans President and CEO Karen Ignagni said cost containment that singles out health plans "ignores the very inconvenient truth that premium increases reflect increases in the underlying cost of medical services."