Study: Health Insurers Are Near-Monopolies

Study: Health Insurers Are Near-Monopolies | Tuesday, April 18, 2006 by the Associated Press

Consolidation among health insurers is creating near-monopolies in virtually all reaches of the United States, according to a study released Monday.

Data from the American Medical Association show that in each of 43 states, a handful of top insurers have gained such a stronghold that their markets are considered "highly concentrated" under U.S. Department of Justice guidelines, often far exceeding the thresholds that trigger antitrust concerns.

The study also shows that in 166 of 294 metropolitan areas, or 56 percent, a single insurer controls more than half the business in health maintenance organization and preferred provider networks underwriting.

"This problem is widespread across the country, and it needs to be looked at," said Jim Rohack, an AMA trustee and physician in Temple, Texas. "The choices that patients have now are more difficult."

The AMA study cited a Justice Department benchmark in citing antitrust concerns, the Herfindahl-Hirschman Index, or HHI. A score above 1,000 shows "moderate" concentration. Those scoring above 1,800 yield a "high" concentration.

Figures show that 95 percent of the 294 HMO/PPO metropolitan markets studied were above 1,800. Raise that HHI bar even higher to 3,000, and 67 percent rise above it.

The AMA study is the latest piece of evidence — and most comprehensive to date — showing the market power of a few companies, and a large number of regional nonprofit Blue Cross operations, is formidable and growing. And it comes as premiums continue to grow at near double-digit percentage rates.

Critics say that carriers are not only creating monopolies and oligopolies in many regions, they also control the other side of the equation in what is known as monopsony power. That means in addition to having the most enrollees, they're also the biggest purchasers of health care and can dictate prices and coverage terms. ...