Kaiser: Lack of competition endemic

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Indiana’s health insurance markets are highly concentrated with little competition—but many other states have even worse situations.

Indiana ranked as the 19th least-competitive state for individual health insurance and the 27th least competitive for small-employer health insurance, according to a recent analysis by the California-based Kaiser Family Foundation.

Indianapolis-based WellPoint Inc., of course, dominated both markets. It covers 65 percent of Hoosiers buying individual insurance coverage and 54 percent of those covered by small-employer plans.

Those totals include Hoosiers covered by WellPoint’s Indiana subsidiary, Anthem Blue Cross and Blue Shield, as well as people covered by other health plans WellPoint also owns.

Kaiser based its analysis on data reported by the insurers to the National Association of Insurance Commissioners, a group that includes the insurance regulators in all states. Insurers have been required to report their membership counts to the association as part of the 2010 Patient Protection and Affordable Care Act, also called the ACA.

Kaiser ranked each state on competitiveness by calculating Herfindahl-Hirschman Index scores for each one. The index scores are calculated by squaring the market share percentages of the 50 largest companies.

A score of 2,500 or above is perceived as an uncompetitive market. Forty-five states were above that threshold in the individual market and 39 exceeded it in the small employer market.

Indiana easily surpassed the mark in both categories: Its individual insurance market has a score of 4,480 and its small-employer market had a score of 3,313.

The most uncompetitive state—in both the individual and small-employer markets—is Alabama. There, the Blue Cross and Blue Shield of Alabama controls 86 percent of the individual market and 96 percent of the small-employer market.

“The current insurance markets in many states are highly concentrated with only modest competition,” concluded the authors of the Kaiser study, Cynthia Cox and Larry Levitt. “As state policymakers consider their options as implementation of the ACA proceeds, they may want to examine the level of competitiveness in their insurance markets as a factor in the choices they make with respect to insurance market rules, exchanges, and rate review.”

The Kaiser study did not attempt to rank the competitiveness of the entire commercial market in Indiana, which includes all individual, small-employer and large-employer plans. However, a recent study by the American Medical Association did that, using 2009 data from Tennessee-based market research firm HealthLeaders-InterStudy.

The AMA concluded that WellPoint controlled 61 percent of the entire commercial market in Indiana, followed by Minnesota-based UnitedHealthcare with 15 percent. Using the Herfindahl-Hirschman Index, Indiana had a score of 4,051. Only eight other states had less-competitive insurance markets.

“High concentration levels in health insurance markets are largely the result of consolidation, which can lead to the exercise of market power and, in turn, harm to consumers and providers of care,” wrote the authors of the AMA study.


  • Re: Contract CFO
    ummmm, if *Obama really cared* he'd have gotten Medicare for ALL which is the absolute best way to ensure health care for EVERYONE and at a lower cost...Canada does it at 60% of what costs in US per person...same with France, Germany, Japan, Denmark, etc...you MUST take the insurance companies out of the process for ALL to have adequate care, otherwise they continue to discriminate with premium hikes and ever higher deductibles, co-pays etc...if people can't afford premiums now they sure as hell won't be able to afford them in two years!
  • Reality
    The reality is that health insurance rates are 80-85% about the underlying cost of medical care, and only 15-20% about the administrative expense and profit of the insurance companies. More competition among insurance companies doesn't hold down the number of tests your doctor does, or the new buildings that all of the hospitals build that have to be used and have their beds filled, or people demanding the latest greatest very expensive drug even though there's only a 1% chance it will cure them. Until Americans learn that more medical consumption isn't necessarily better, competition among insurers won't solve the issue this country has with medical inflation.
  • Contract CFO
    While these results are not surprising, I'm shocked that employees have not voiced their opinion.

    Year over year increases of 20% or more for health insurance costs are usually explained in terms of higher medical costs. Causing us to continually lessen coverage to keep insurance affordable. Actually, the study sheds light on truth, lack of competition and insurance company greed. If 'Obama Really Cared', he would develop a plan that standardizes carrier rates. Of course in doing this, government intervenes and builds another layer of jobs. (but at least that would justify increased rates). I am not in favor of govt healthcare, but I am tired of having to deliver reduced employee benefits at continually higher rates. At least in the oil / gas industries, rates do occasionally fluctuate downward. Even in years of inflationary gas prices, thankfully we have not seen 20$ yr over yr increases.

    It's time for employees to push back, and for corporate executives to organize a reputable group to lobby against the local monopolized insurance companies. We need more competitive health insurance choices, TODAY!!

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