Consumers have faced the challenge of limited health insurance options for the past decade, says AMA report

The American Medical Association (AMA) recently released the 23rd edition, and 2024 update, of their market analysis, “Competition in Health Insurance: A Comprehensive Study of U.S. Markets.” The analysis determined that dominant health insurers, in the vast majority of metropolitan areas across the U.S., have consolidated significant market shares, driven away competitors and left consumers with limited options for medical coverage.

“For too many Americans living in highly concentrated health insurance markets, choosing medical coverage feels like having no choice at all,” Bruce A. Scott, MD, president of the AMA, said in an AMA release. “The AMA strongly encourages a dialogue among regulators, policymakers, lawmakers and others to reverse the trend toward health insurance consolidation and create a better, more open and competitive marketplace to benefit patients.”

The economic analysis examined 382 metropolitan statistical areas (MSAs), the 50 states and the District of Colombia, reporting commercial and Medicare Advantage (MA) market shares, in addition to the Herfindahl-Hirschman Indices (HHIs), for the two largest health insurance companies in each of the geographic markets. The report then analyzed state-and MSA-level market concentration, according to measures issued in the revised U.S. Department of Justice (DOJ) and Federal Trade Commission (FTC) Merger Guidelines. According to the guidelines, markets exceeding a set regulatory threshold—in this case, an HHI of 1,800—are considered “highly concentrated,” lacking adequate health insurer competition.

Commercial markets

The analysis found that 95% of MSA-level commercial markets were highly concentrated, with HHIs over 1,800. Markets have remained consistently highly concentrated since 2014, hovering between 95% and 96%. The report also suggested that competition and choice have continued to deteriorate, with 49% of markets that were highly concentrated in 2014 becoming more consolidated by 2023. At the time of the 2024 report, the average commercial market was also highly concentrated, with an HHI of 3,458. In 89% of MSA-level markets, at least one insurer held a commercial market share of at least 30%. In 47% of MSA-level markets, one insurer’s share was at least 50%.

Notably, Blue Cross Blue Shield insurers held the largest state-level market shares in 41 different states, in addition to the largest MSA-level market shares in 83% of MSAs. The analysis also reported that Elevance Health (formerly Anthem) had the largest MSA-level market share in 21% of MSAs. Nationally, UnitedHealth Group was the largest commercial health insurer by market share in the U.S., while Centene was the largest insurer by market share in exchanges.

Medicare Advantage (MA)

The economic analysis also found MA markets to be highly concentrated, with a similar history. More than half (54%) of Medicare beneficiaries were enrolled in MA in 2024, which is up from 19% in 2007. In 2023, 97% of MSA-level MA markets were determined to be highly concentrated, a total which has hovered between 97% and 99% since 2017, according to the report. The average MA market was also highly concentrated, with an HHI of 3,129. Similar to commercial markets, UnitedHealth Group was also found to be the largest health insurer in the MA market, with a national-level share of 29%. Locally, UnitedHealth Group had the largest MSA-level market share, at 43% of MSAs.

The authors of the report reiterated that most U.S. health insurance markets are, and have been, highly concentrated over the past decade. They emphasized that the prospect of future consolidation in the health insurance industry should be viewed in the context of the low levels of competition in the vast majority of U.S. health insurance markets. “[This], coupled with external evidence on their anticompetitive behavior, this strongly suggests that health insurers are exercising market power in many parts of the country and, in turn, causing competitive harm to consumers and providers of care,” the authors wrote.