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, 2019 update
The 2019 update to Competition in Health Insurance: A Comprehensive Study of U.S. Markets (PDF) presents 2018 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 state- and MSA-level markets across the U.S.
Key findings from the 2019 update include:
- Seventy-five percent (285) of the 382 MSA-level commercial markets studied were highly concentrated (HHI>2,500) in 2018, up from 71% in 2014.
- The average HHI across MSA-level markets was 3504 in 2018.
- Among the 58% of markets that experienced an increase in the HHI between 2014 and 2018, the average increase was 498 points.
- Of the markets that were not highly concentrated in 2014, 27% experienced an increase in the HHI large enough to place them in the highly concentrated category in 2018. Another 40% also had an increase, though not large enough to make them highly concentrated.
- In 91% (348) of MSAs, at least one insurer held a commercial market share of 30% or greater, and in 48% (182) of MSAs, one insurer's share was at least 50%.
Maps from the study
- Ten states with the least competitive commercial health insurance markets, 2018 (PDF)
- Ten states with the least competitive HMO markets, 2018 (PDF)
- Ten states with the least competitive PPO markets, 2018 (PDF)
- Ten states with the least competitive POS markets, 2018 (PDF)
- Ten states with the least competitive exchanges, 2018 (PDF)
- Ten states with the largest decrease in competition levels, 2017–2018 (PDF)
Previous editions of Competition in Health Insurance
Research on the Anthem-Cigna and Aetna-Humana mergers
AMA conducted analyses (see below) of the likely impact that the blocked Anthem-Cigna and Aetna-Humana mergers would have had on commercial markets and of the Aetna-Humana merger on Medicare Advantage markets. The analyses found that each of the mergers would have likely been anticompetitive in numerous markets across the U.S.
- Effects of Anthem-Cigna merger on commercial markets (PDF)
- Effects of Aetna-Humana merger on commercial markets (PDF)
- Effects of Aetna-Humana merger on Medicare Advantage markets (PDF)
Read more about the AMA’s successful efforts to block the Anthem-Cigna and Aetna-Humana mergers.
Research on the UnitedHealth-Sierra Health merger
This paper (PDF) 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.