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Competition in Health Insurance Research

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The Division of Economic and Health Policy Research conducts independent research on competition in health insurance markets.

A key question of public policy is whether health insurance markets are competitive or whether insurers have market power, which can harm consumers and health care providers. A useful indicator of competition and market power is market concentration. The U.S. Department of Justice and the Federal Trade Commission examine concentration in their evaluation of proposed mergers between firms.

One of the division's most significant efforts is the annual Competition in Health Insurance study. It has also conducted analyses of past and proposed mergers among health insurers. 

Competition in Health Insurance 2017

The 2017 Update to Competition in Health Insurance: A Comprehensive Study of U.S. Markets presents 2016 data on the degree of competition in health insurance markets. It is intended to help identify areas where consolidation among health insurers may cause anticompetitive harm to consumers and providers of care. The study reports the 2 largest insurers’ commercial market shares and the concentration levels (HHIs) for markets across the U.S.

Key findings from the 2017 Update include:

  • Sixty-nine percent (270) of 389 MSA-level markets studied were highly concentrated.
  • The average HHI across MSA-level markets was 3353.
  • In 89 percent (347) of MSAs, at least one insurer held a commercial market share of 30 percent or greater, and in 43 percent (169) of MSAs, one insurer's share was at least 50 percent.
A map graphic showing the ten states with the least competitive commercial health insurance markets in 2016

Anthem-Cigna and Aetna-Humana Mergers Analyses

AMA conducted analyses of the impacts of the proposed Anthem-Cigna and Aetna-Humana mergers on commercial markets and of the Aetna-Humana merger on Medicare Advantage markets. The analyses found that each of the mergers would likely be anticompetitive in numerous markets across the U.S.

Research Article on the 2008 UnitedHealth-Sierra Health Merger

This paper examines the association between health insurance market concentration and prices. It is a case study of the 2008 merger between UnitedHealth Group and Sierra Health Services.

It found that health plan premiums in Nevada markets increased by 13.7% after the merger. The findings suggest that the merging parties exploited the market power gained from the merger.

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