By Emily Berry
American Medical News
March 8, 2010
Members of Congress and state lawmakers have called health insurance executives on the carpet to make them explain why their companies are hiking individual insurance rates so steeply across the country. A recently released American Medical Association study of health insurance markets gives one answer: Because they can.
The AMA's most recent look at the health insurance market -- "Competition in health insurance: A comprehensive study of U.S. markets," released Feb. 23 and based on 2009 data -- finds that 99% of 313 metropolitan areas tracked would be considered to have "highly concentrated" insurance markets under guidelines used by the U.S. Dept. of Justice and the Federal Trade Commission. In its 2009 version of the study, the AMA found that 94% of metropolitan areas were ranked "highly concentrated."
One insurer held 70% or more of the health plan market share in 24 of 43 states measured, up from 18 in 42 states in the previous year's study. In 92% of the 313 markets in the report, one insurer held at least a 30% share.
In past releases of its survey, the AMA has noted that insurer market dominance has allowed health plans to force physicians into take-it-or-leave-it contracts. But this year the AMA -- echoing other experts -- noted that market dominance has allowed plans to give patients take-it-or-leave-it pricing.
Transcript of conference call with Willis
March 3, 2010
Matt Borsch, Goldman Sachs: Let me jump right in here with, perhaps, the most important question from the standpoint of institutional investors looking at the sector, and that is, what are you seeing in terms of competition between the carriers, specifically relative to last year or two years ago or whatever you want to use as the baseline, has price competition increased or decreased?
Steve Lewis, regional leader for the employee benefits practice of Willis, the third largest insurance broker in the world: As a specific answer to that, we would say, price competition is down from year ago. An overall theme that we would characterize this year, meaning, when I say this year, the just completed January 1 renewals, and continuing up and through today. We feel this is the most challenging environment for us and our clients in my 20 years in the business.
Not only is price competition down from year ago (when we had characterized last year's price competition as being down from the prior year), but trend or (healthcare) inflation is also up and appears to be rising. The incumbent carriers seem more willing than ever to walk away from existing business resulting in some carrier changes.
And that's a significant adjustment from last year where we saw aggressive pricing on the renewal front but not so much on the new business front.
By Don McCanne, MD
So 99 percent of metropolitan areas have "highly concentrated" private insurance markets, and price competition of private insurers continues to decrease as private insurers are "more willing than ever to walk away from existing business." Competitive pricing has almost disappeared from the private insurance market, so insurance has become a "take it or leave it" proposition.
And precisely what does the legislation before Congress do to ensure a competitive market of private insurance plans? Look at the Senate bill which forms the basis of the Obama proposal. When you read "Part II - Consumer Choices and Insurance Competition through Health Benefit Exchanges," you will see that this legislation does virtually nothing to expand insurer competition in these concentrated markets.
President Obama and the members of Congress need to give up on the idea that they can legislate a thriving, competitive market of private health plans that will bring affordable health care to all of us. The changes that would be required are not in this bill, and, besides, they would be more complex, more expensive, and less effective than merely replacing the private insurers with a single payer national health program - an improved Medicare for all.
Once again today, in a pep talk at Arcadia University near Philadelphia, President Obama said that they put all ideas on the table, but they didn't. They left single payer off. He did mention that people on the left wanted single payer, and judging by the cheers, apparently the audience wants single payer as well. Too bad he doesn't listen.