What’s the news: A new examination of Medicare Advantage markets in 380 metropolitan statistical areas (MSAs) has found that 79% had low levels of competition as these local-level markets ranked “highly concentrated” according to federal guidelines.

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The 2022 edition of “Competition in Health Insurance: A Comprehensive Study of U.S. Markets” (PDF) for the first time examines Medicare Advantage markets in 380 metropolitan statistical areas (MSAs) and presents the two largest insurers' market shares and market concentration levels as measures of competition.

With the addition of Medicare Advantage markets, the annual AMA study continues to offer the largest and most complete picture of competition in health insurance markets for metropolitan areas across the country, as well as all 50 states and the District of Columbia. In addition to Medicare Advantage enrollment, the study is based on 2021 data captured from commercial enrollment in preferred provider organizations, health maintenance organizations, point of service, consumer-driven health plans, and public health exchanges.

Similar to Medicare Advantage, the vast majority of commercial markets at the MSA-level are also highly concentrated. Three in four MSAs had commercial markets with low levels of competition as these local-level markets ranked “highly concentrated” according to federal guidelines.

The study notes that insurers had large market shares in both commercial and Medicare Advantage markets. According to the latest data, UnitedHealth Group is the largest insurer in both markets and CVS Health (owner of Aetna) is the third largest in both markets.

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Why it’s important: “High levels of market concentration can result in diminished competitive constraints on insurers,” said AMA President Jack Resneck, Jr., MD. “Unchecked market power among insurers is a formula for higher premiums, lower coverage and inadequate levels of patient care, concerns of great relevance to Medicare Advantage.

“Most large Medicare Advantage insurers are accused of fraud and flouting the authority of federal agencies,” Dr. Resneck added. “The new AMA study shines a light on the lack of competition in Medicare Advantage markets across the country and will help regulators and lawmakers better scrutinize anticompetitive insurer behavior that harms patients and physicians in an industry where exploitative business practices are already commonplace.”

Learn more: Here are some other highlights from study, with additional insights available at the AMA’s Competition in Health Care Research website.

In commercial markets:

  • Forty-eight percent of MSA-level markets had one insurer with a share of 50% or more. Eleven percent of MSA-level markets had one insurer with a share of 70% or more.
  • The 10 states (PDF) with the least competitive commercial markets were: 1. Alabama, 2. Michigan, 3. Louisiana, 4. Hawaii, 5. South Carolina, 6. Kentucky, 7. Alaska, 8. Illinois, 9. Vermont, and 10. Delaware. See the 10 states with the least competitive exchange (PDF) markets.

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In Medicare Advantage markets:

  • Thirty-four percent of MSA-level markets had one insurer with a share of 50% or more. Six percent of MSA-level markets had one insurer with a share of 70% or more.
  • The 10 states (PDF) with the least competitive Medicare Advantage markets were: 1. Vermont, 2. North Dakota, 3. Wyoming, 4. Montana, 5. Rhode Island, 6. South Dakota, 7. West Virginia, 8. District of Columbia, 9. Nebraska, and 10. Louisiana.

The study is a vital element of AMA’s continued antitrust advocacy to protect patients and physicians from competitive harm. Health insurance market concentration will continue to be a vital issue of public policy for the AMA, the Federation of Medicine, and the nation’s patients and physicians.

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