The competitiveness of America's state and regional health insurance markets is once again under question as patients and providers demand greater value propositions from payers.
According to the American Medical Association's annual study, many large parts of the country are served by commercial health insurers with significant market presence, or perhaps too much in some places, the group argues.
About two-thirds of the 388 metropolitan areas studied have what the AMA deems "highly concentrated" insurance markets, based on data from commercial fully-insured and self-insured plans in 2012.
In 17 states, one health insurer had a market share of 50 percent or more, and in 45 states, two health insurers had a combined commercial market share of 50 percent or more, the AMA found. "The dominant market power of big health insurers increases the risk of anti-competitive behavior," a "significant barrier to the market success of smaller insurance rivals," said AMA President Robert Wah, MD, in a statement.
By the AMA's reckoning, the 10 states with the most competitive insurance markets are Oregon, Wisconsin, Pennsylvania, New York, Colorado, Missouri, Washington, Ohio, California and Florida. The least competitive states, with the largest commercial insurers per-capita, are Alabama, Hawaii, Michigan, Delaware, Louisiana, South Carolina, Alaska, Illinois, Nebraska and North Dakota -- most of them led by Blue Cross companies.
WellPoint, the issuer of Anthem Blue plans in 14 states, was the largest private health insurer by market share in about 20 percent of all the metro areas studied. Although Wellpoint does not have a significant presence in many of the 10 least competitive states, its market share is still more than double the next two companies.
The insurer with the second highest concentration is also a Blue company, Health Care Services Corporation, issuer of Blue plans in Illinois, Montana, New Mexico, Oklahoma and Texas. The insurer that came in third for market share lead is UnitedHealthcare, the nation's largest insurer with commercial membership of about 28 million (and many more in government programs).
The AMA's data is from 2012, and America's Health Insurance Plans, in response to the AMA's concerns, counters that "provider consolidation, not concentration of health plan markets, is driving up healthcare costs for consumers." But the data does seem to reflect local and regional market dynamics, with the membership of some insurers ebbing and flowing along with consolidation among health systems and physicians practices.
For 2012, Louisiana moved from the ninth to the fifth least competitive state in the AMA's rankings, thanks to Blue Cross and Blue Shield of Louisiana's 65 percent market share. Illinois made the bottom 10 list for the first time, coming in at the 8th least competitive market, with HCSC's Blue Cross and Blue Shield of Illinois also garnering about two-thirds of the commercial market.
BCBSIL has found itself in a unique position as the biggest commercial insurer in a state whose largest market has many hospitals across numerous health systems, recently making waves in greater Chicago for choosing to only negotiate group rates with providers that are under a common ownership.
Advocate Health Care, the state's largest health system, has been trying to incorporate an affiliated provider, the Silver Cross Hospital, in New Lenox, into its rate levels -- unsuccessfully. "If the Blues aren't going to recognize (affiliations), that's really going to have a chilling effect on everybody's non-merger kind of relationship," said Advocate CEO Jim Skogsbergh at a Crain's Chicago Business meeting.
In other states, the AMA's findings suggest that large insurers are not incompatible with choice and competition, such as in Pennsylvania, ranked the third most competitive.
The state of 12 million has no single insurer covering the entire range, but regions with dominant organizations (including three separate Blue Cross companies) as well as bubbling competition from national insurers and provider-owned plans.
In greater Philadelphia, home to dozens of hospitals and health systems, Independence Blue Cross is the main insurer, with some 2.5 million area members in commercial, Medicare and Medicaid plans. IBC has established some fairly collaborative relationships with a variety of health systems across the region, including accountable care agreements with multiple hospitals and a reference pricing program with the University of Pennsylvania Health System.
In Central Pennsylvania, both Capital Blue Cross and the insurance arm of Geisinger Health System are vying for commercial and publicly-insured health plans, while in Pittsburgh these days, the dominant players are two integrated health systems -- Highmark Blue Cross, the owner of the seven hospital Allegheny Health Network, and the University of Pittsburgh Medical Center, whose health plan continues to grow in Medicaid, exchanges and Medicare.
Amid a contentious in-network arrangement that could see many Highmark members decreasing their use of UPMC providers, UPMC is both turning to its own health plan and national insurers like United, Aetna and Cigna to try to chip away at Highmark's influence.