Largest Insurers Control Market in Many States, GAO Report Says
A small number of insurers control much of the individual and employer health insurance markets in most states, according to a Government Accountability Office report released Monday, Modern Healthcare reports.
For the report, GAO examined data from 2010 to 2013, before coverage expansions and the exchanges took effect under the Affordable Care Act in 2014. The report was required by the ACA (Herman, Modern Healthcare, 12/1). The report was given to the:
- House Education and Workforce Committee;
- House Energy and Commerce Committee;
- House Ways and Means Committee;
- Senate Health, Education, Labor and Pensions Committee; and
- Senate Finance Committee (Ferris, The Hill, 12/1).
GAO will issue its next report on the matter in two years.
The report found that the three largest insurers in 37 states controlled at least 80% of total plan enrollment in the individual, small-group and large-group insurance markets in 2013 (Modern Healthcare, 12/1). Specifically, the report showed that the insurers had an average of 86% of total enrollees in the individual market in 2013, up from 83% in 2010 (The Hill, 12/1).
Richard Hirth, a professor of health policy and management at the University of Michigan's School of Public Health, noted that taking large insurers such as Aetna, Blue Cross and Blue Shield and UnitedHealth Group into account, "you've got already a pretty big chunk of the market" in a lot of states. For example, the report showed that in Alabama, Blue Cross and Blue Shield in 2013 controlled:
- 97% of the small-group health insurance market;
- 92% of the large-group market; and
- 90% of the individual health plan market.
Meanwhile, the top three insurers in 2013 controlled 100% of markets in some rural and small states, including:
- South Dakota;
- Vermont; and
- Wyoming (Modern Healthcare, 12/1).
Further, the report found that the largest three insurers in 2013 held a minimum of 95% of all enrollees in nearly a dozen states, including:
- Kentucky; and
- New Jersey (The Hill, 12/1).
Overall, the report found that the individual health insurance markets had the highest average number of plans, with 24. Meanwhile, an average of 12 insurers offered plans in small-group markets, while an average of 11 insurers offered plans in large-group markets.
ACA Effect Unclear
According to Modern Healthcare, it is unclear how increased competition through the ACA's exchanges will affect market shares. Some experts have said the exchanges are unlikely to have much influence. For example, Kaiser Family Foundation Senior Vice President Larry Levitt said, "Insurance markets have long been highly concentrated," adding, "That was true before the [ACA], and it will likely be true after."
However, Levitt noted the ACA contains some provisions to ensure large insurers cannot capitalize on a lack of competition and drive up prices. He said, "There are some signs that new entrants are putting competitive pressure on existing insurers in the ACA's marketplaces and grabbing market share." He added, "That could scramble the playing field over the next couple of years" (Modern Healthcare, 12/1).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.