A new study by the American Medical Association shows that many health insurance markets across the country lack significant competition and are instead dominated by one or two insurance companies.
"The market power of health insurers places physicians and patients at a significant disadvantage," said Cecil B. Wilson, MD, the AMA's president. "When insurers dominate a market, people pay higher health insurance premiums than they should, and physicians are pressured to accept unfair contract terms and corporate policies, which undermines the physician role as patient advocate."
[See how physicians can take greater control in new payment and care models: AMA says physicians should lead ACO development]
In contrast, physicians are the least concentrated segment of the healthcare sector, with 78 percent of office-based physicians working in practices with nine physicians or less.
"The market power of health insurers continues to prompt anti-competitive concerns among physicians," said Wilson. "To help restore a competitive balance to health insurance markets, the AMA urges the federal and state agencies to prohibit harmful insurance company mergers and adopt policies that would level the playing field between small physician practices and large insurers."
The 2010 edition of Competition in Health Insurance: A Comprehensive Study of U.S. Markets found that 99 percent of health insurance markets in the United States are "highly concentrated," based on the 1997 U.S. Department of Justice and Federal Trade Commission Horizontal Merger Guidelines.
[See also: Michigan insurers abandon merger plans under federal pressure]
The study used 2008 enrollment figures from HMOs and PPOs in 359 metropolitan statistical areas (MSAs) in 46 sates. It found that in 48 percent of MSAs, at least one insurer had a market share of 50 percent or more.
Other key findings of the report:
- In 60 percent of the metropolitan statistical areas, the two largest insurers had a combined market share of 70 percent or greater.
- In 18 percent of the metropolitan statistical areas, at least one insurer had a market share of 70 percent or greater.
- In 24 states, the two largest insurers had a combined market share of 70 percent or more.