AMA Reveals Concerns on Competition in Health Insurance Markets

The American Medical Association (AMA) has unveiled its latest findings on the state of competition in health insurance markets, offering insights vital for the insurance industry and its stakeholders. According to the AMA’s “Competition in Health Insurance: A Comprehensive Study of U.S. Markets Report,” there is significant consolidation within the industry. This trend influences competition dynamics, operational strategies, and regulatory compliance for insurers.

Market Consolidation and Competitive Dynamics

The AMA's comprehensive analysis, covering 384 metropolitan areas and all 50 states including the District of Columbia using data from 2024, highlights pervasive high concentration levels across U.S. health insurance markets. Notably, 97% of metropolitan statistical areas exhibit high concentration as per Department of Justice and Federal Trade Commission guidelines. The report also reveals that in 91% of these markets, a single insurer controls 30% or more of the market share, with dominance evident in 47% of markets where one provider commands at least half the share.

Strategic Implications for Insurers

The 2024 data indicates that market concentration rose in 54% of markets analyzed, as measured by the Herfindahl-Hirschman Index (HHI). Despite some regions experiencing a decrease in HHI, the average index rose by 164 points from 2014 to 2024. While exchanges have somewhat moderated this increase, the overall trend towards consolidation remains unchecked. For stakeholders in the insurance industry, these findings underscore the importance of strategic planning in mergers, acquisitions, risk management, and regulatory compliance as they navigate highly concentrated markets.