AMA survey: Health plan market domination virtually complete

In just about every metropolitan area, one or two firms control at least half the HMO/PPO market. Doctors aren't the only ones noticing.

By Bob Cook, amednews staff. May 8, 2006.

The AMA's latest study of health plan competition shows that local market domination is a fact of life in just about every metropolitan area in the country -- a clue as to why physicians, businesses and others are trying to find a way out from the current third-party payer system.

The report found that out of 294 metropolitan areas studied, only 15 markets in six states -- California, Colorado, New Jersey, New York, Ohio and Pennsylvania -- did not meet the U.S. Justice Dept.'s definition of a "highly consolidated" HMO/PPO market. And those markets, the study says, are hardly competitive free-for-alls. They meet Justice's definition of "consolidated" HMO/PPO markets.

A highly consolidated market usually has two plans with at least 50% of the HMO/PPO market, while a consolidated market usually has two plans capturing at least 40%.

The AMA has sounded the alarm for years over health plan consolidation, saying it takes away physician leverage in contract negotiations and increases consumer premiums. But AMA Trustee J. James Rohack, MD, a Temple, Texas, cardiologist, said it is not just physicians taking notice of market consolidation. That issue, he said, has greater awareness among the public. Businesses are dropping or curtailing coverage because of increasing premiums, creating more uninsured and underinsured patients.

"Now all of a sudden the light bulbs have [turned on]," he said. "This is the time where you've got record profits being made by these for-profit insurance companies. ... Some people are coming to a realization that there needs to be a balance of providing affordable insurance."

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