The extent of consolidation is evident when looking at specific statistics from the AMA study.
Over the last decade, health insurance options have become increasingly limited across the United States as a result of market consolidation. A recent analysis by the American Medical Association (AMA) revealed a significant reduction in competition within the health insurance sector, leaving consumers with fewer choices. The organization’s study, titled Competition in Health Insurance: A Comprehensive Study of U.S. Markets, assessed the market dynamics in 382 metropolitan areas, each of the 50 states, and the District of Columbia, focusing on commercial health insurance and Medicare Advantage plans. The findings showed that 95% of these local markets have high levels of market concentration, meaning that one or two companies dominate, effectively limiting consumer options.
The study used metrics aligned with federal merger guidelines, highlighting how a small number of insurers now control large portions of the market. For instance, in nearly half of these metropolitan areas, a single insurer holds at least 50% of the commercial market share. This trend has created a landscape where the dominant companies, often regional giants like Blue Cross Blue Shield, Elevance Health (formerly Anthem), and UnitedHealth Group, have significant power over pricing and plan availability. Blue Cross Blue Shield holds the largest market share in 41 states and dominates 83% of the analyzed metropolitan areas. UnitedHealth Group has expanded its reach in both commercial and Medicare Advantage markets, holding substantial shares at both national and local levels.
Market concentration has real implications for patients and physicians alike. As choices narrow, competition fades, reducing the incentive for insurers to improve service quality or control premium costs.
“For too many Americans living in highly concentrated health insurance markets, choosing medical coverage feels like having no choice at all,” said AMA President Bruce A. Scott, M.D. “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 extent of consolidation is evident when looking at specific statistics from the AMA study. In 95% of metropolitan areas, market concentration levels surpassed federal thresholds for competitiveness both in 2014 and 2023, with most markets experiencing a further increase in concentration over this period. This indicates a steady decline in competition as the largest insurers solidify their control. In 89% of these areas, at least one insurer controls over 30% of the market, while in 47%, a single insurer claims over half the market.
Medicare Advantage plans have also seen reduced competition. The study found that 97% of these markets are highly concentrated, with UnitedHealth Group expanding its share from 25% in 2017 to 29% in 2023. Similar to commercial insurance markets, local Medicare Advantage markets are now largely controlled by a small number of insurers, leaving beneficiaries with restricted choices and potentially impacting plan costs and benefits.
The effects of limited competition in the health insurance industry reach beyond consumers to affect healthcare providers. With only a few insurers dominating many areas, physicians and healthcare organizations often have limited bargaining power when negotiating rates, which can affect reimbursement levels and even impact the availability of services. This market structure can also lead to fewer innovations in health plan offerings, as dominant insurers face little incentive to improve in areas such as customer service or preventive care.
The AMA has been actively monitoring these trends for over two decades, using its findings to inform policymakers and regulators about areas where market concentration might harm consumers and healthcare providers. The association’s advocacy efforts focus on preventing further consolidation and to encourage policies that promote competitive markets. These efforts are particularly critical as regulatory bodies review potential mergers or acquisitions involving health insurers. By highlighting the risks of further consolidation, the AMA hopes to protect both patient choice and physician autonomy, ensuring that the healthcare market remains responsive to the needs of its consumers.
Sources:
Consumers challenged by a decade of limited health insurance options
Competition in health insurance: A comprehensive study of U.S. markets, 2024 update
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