Health plan market dominance: FTC should rein in overbearing plans

With such influence greater than ever, federal regulators need to ensure that insurers don't abuse their power.

Editorial. March 3, 2003.

Just about all health care, like politics, is local. And for physicians in much of the country, the dominance by health plans is the equivalent of being the opposition to a big-city mayoral machine.

With the recent release of its report "Competition in Health Insurance: A Comprehensive Study of U.S. Markets," the AMA presents evidence that health plan dominance in local markets is greater than ever. For this reason, in late January the AMA renewed its call for the Federal Trade Commission to begin investigating HMOs and other health plans -- and not just physicians, the typical target -- for health care antitrust violations.

The U.S. Dept. of Justice, which also handles antitrust matters, last fall said it would make a priority out of scrutinizing insurance mergers, and of evaluating unilateral or coordinated insurer conduct. But it has taken no action yet against any plan. It needs to step up its efforts.

Even more glaring, is that despite more than 350 health plan mergers between 1995 and 2001, the FTC has never taken action to block a merger or cite a plan for anti-competitive behavior. This, even though the market power of health plans in 61 out of 70 metropolitan areas examined in the AMA's study would be considered "highly concentrated" using Dept. of Justice standards.