With its 2020 “Competition in Health Insurance” study, the American Medical Association (AMA) set out to identify markets where the M&A of health insurance companies could cause competitive harm to consumers and providers.
The study found plenty. Its analysis of 384 metropolitan statistical areas showed a continued, upward trend in insurance consolidation between 2014 and 2019. Most commercial insurance markets—affecting 70 million Americans—were deemed “highly concentrated.”
So why is this concerning? Less competition among insurance companies can leave providers and patients dependent on the mercy of a handful of big insurers—who have demonstrated that they have little to spare. The AMA has pointed out that non-competitive health insurance markets can trigger soaring premiums, deductibles, and copayments for patients, without an increase in benefits.
Just as alarming is the response from the America’s Health Insurance Plans (AHIP) spokesperson, who tried to shift the focus to M&A among health systems. To us, this smells like a red herring. A major point of difference here is that if HCA Healthcare is the largest national hospital provider with 180 hospitals, that’s still only 3% of U.S. hospitals. Compare that to UnitedHealth Group, which has 14% of national market share—and growing.
When health insurance insiders try to shift focus onto health system consolidation, it’s important to ask: What other options do these systems have? How else can they match insurers’ market power in contract negotiations? And let’s not forget the biggest difference in this apples-to-oranges comparison. One side is actually providing care. The other is holding the purse strings.
