Areas in which a few health insurers are concentrated can put independent physicians or small practices at a disadvantage because they don't have the muscle to negotiate from a strong position with the dominant payers, the American Medical Association said in a report.
The AMA is concerned because 60 percent of primary care physicians work in small or solo practices.
In the report, the AMA identifies the top 10 states with the least competitive commercial health insurance markets. "In far too many states, one or two insurance companies dominate the market, which can hurt patients, physicians and employers," said AMA President Ardis Dee Hoven, MD, in a news release accompanying the report. "Without rivals to compete against, a large health insurance company can take advantage of patients by raising premiums and dictating important aspects of patient care."
Based on 2011 data, the 2013 edition of AMA's "Competition in Health Insurance: A Comprehensive Study of U.S. Markets" examined state and metropolitan markets for the health insurance industry's chief products. The study looked at fully insured and self-insured plans in 386 metropolitan areas representing all 50 states and the District of Columbia.
According to the report, the 10 states with the least competitive commercial health insurance markets were:
- Alabama
- Hawaii
- Michigan
- Delaware
- Alaska
- South Carolina
- North Dakota
- Nebraska
- Louisiana
- Rhode Island
Fifteen states had a single health insurer with a commercial market share of 50 percent or more. Forty-five states had two health insurers with a combined commercial market share of 50 percent or more.
The 10 states that experienced the biggest drop in competition levels between 2010 and 2011 were:
- Louisiana
- Idaho
- Oklahoma
- Iowa
- Texas
- Missouri
- Nebraska
- Kansas
- Ohio
- Arkansas
Low levels of health insurer competition were present in 71 percent of the metropolitan areas studied by the AMA. Those markets are rated "highly concentrated," based on the 2010 Horizontal Merger Guidelines issued by the U.S. Department of Justice and Federal Trade Commission.
"An absence of competition in health insurance markets places a particular strain on physicians in small practices who don't have the leverage to be equal negotiating partners with large health insurers," said Hoven.
AMA said it released the report to help researchers, lawmakers, policymakers and regulators "identify markets where mergers and acquisitions among health insurers may cause competitive harm to patients, physicians and employers."