News: Growing lack of competition in Medicare Advantage markets, study shows
Of the metropolitan statistical areas in the United States, 79% have Medical Advantage (MA) markets that were highly concentrated in 2021, according to a study released by the American Medical Association (AMA). These findings show the lack of competition present in MA markets, Healthleaders reported.
For the study, AMA examined health insurers in 380 metropolitan statistical areas (MSAs) in the United States. The used the Herfindahl-Hirschman Index (HHI) for calculating market competition with factors in market size and distribution. Markets with an HHI between 1,500 and 2,500 are considered moderately concentrated, while those with a 2,500 HHI score or above are considered highly concentrated and therefore uncompetitive. For 2021, the AMA study scored the average MA market at 3,331, while the median was 3,068.
Other findings showed that 34% of MA markets had one insurer with a share of 50% or more, and 6% had one insurer with a share of 70% or more. The five largest insurers by MA market share were UnitedHealth Group (28%), Humana (19%), CVS Health (11%), Kaiser Permanente (7%), and Elevance Health (6%).
“High levels of market concentration can result in diminished competitive constraints on insurers,” AMA President Jack Resneck, Jr. said. “The new AMA study shines a light on the lack of competition in Medicare Advantage markets across the country and will help regulators and lawmakers better scrutinize anticompetitive insurer behavior that harms patients and physicians in an industry where exploitative business practices are already commonplace.”