In at least 37 states, the three largest payers hold 80% or more of the private health insurance market, GAO found.
The private health insurance market remains concentrated among a small number of payers, with the three largest companies holding 80 percent or more of the market, a recent GAO report found.
Three or fewer companies held 80 percent or more of the market in at least 46 of 49 ACA exchanges for individuals, and in 42 of 46 exchanges for small employers.
“A highly concentrated health insurance market may indicate less competition and could affect consumers’ choice of issuers and the premiums they pay,” GAO said.
Competition rates have not changed much in recent years, according to previous GAO reports. In September 2016, the agency found that the three largest issuers held 80 percent of the market in most states from 2011 to 2014.
GAO set out to update their findings and analyze changes in the overall individual, small group, and large group markets in each state. The agency evaluated 2015 and 2016 Medical Loss Ratio data reported by issuers, as well as data from CMS.
The report showed that states’ overall individual insurance markets were generally concentrated among a small number of insurers in 2015 and 2016, results that were consistent with what the agency found in 2011 through 2014.
“On average, there were 16 issuers participating in each state in 2016. However, that same year, the 3 largest issuers cumulatively held 80 percent or more of the market—an indicator of high concentration—in 37 of 51 states,” GAO said.
“The remaining issuers in each state often had significantly smaller market shares—on average, 12 of the 16 issuers in each state held less than 5 percent market share.”
The results also showed that in 2016, a single insurer held at least 50 percent of the market in 28 states. Of these states, a single issuer held between 80 and 90 percent of the market share in five states, and more than 90 percent of the market share in two states.
“For example, although West Virginia had 15 issuers in 2016, a single issuer, Highmark, held 91 percent market share,” GAO said. “This largest issuer position was held by the same company in both 2015 and 2016 in 45 states; in 35 of these states, the largest issuer had been the same since 2011.”
Additionally, the agency noted that from 2014 to 2016, the market share of the three largest issuers increased in 30 states, with a median increase of four percentage points.
State individual market exchanges were also concentrated, GAO said. From 2015 to 2017, three of the largest issuers held 80 percent or more of the exchange market across state rating areas in at least 46 of 49 states.
Over this period, the number of states with an average of three or fewer issuers in their rating areas doubled, increasing from 16 states in 2015 to 32 states in 2017. These issuers accounted for 100 percent, or nearly 100 percent, of the market share in these states.
In addition, many states’ individual market exchanges grew increasingly concentrated between 2015 and 2017, GAO noted.
“In 32 of 49 states, the average market share of the largest exchange issuer across the states’ rating areas increased between 2015 and 2017, with a median increase of 13 percentage points,” the report said.
In its analysis of small group markets and exchanges, GAO found that the overall small group health insurance market remained concentrated in recent years, similar to its previous report.
“On average, there were 8 issuers participating in each state in 2016,” the report said.
“However, in that same year the 3 largest issuers cumulatively held 80 percent or more of the market—an indicator of high concentration—in about three-quarters of states, generally consistent with what we previously reported for years 2011 through 2014.”
The agency also found that the largest issuers held 50 percent or more of the market in 30 states in 2016.
“For example, though Louisiana had 6 issuers in 2016, the largest issuer held 76 percent market share,” GAO said.
“Overall, a single issuer held between 80 and 90 percent market share in ten states, and more than 90 percent market share in one state.”
Small group exchanges often had low enrollment, the report noted, typically less than one percent of the overall small group market. States’ exchanges also remained concentrated from 2015 to 2017, with only slight changes in issuer participation or market share.
GAO stated that over this period, more than 31 of the 46 states had three or fewer issuers in the small group health options program exchange, enabling one to three issuers to hold 100 percent of the market share for the state.
In 2015 and 2016, states’ large group health insurance markets remained concentrated as well, similar to prior years. The report shows that in 2016, the three largest issuers held at least 80 percent market share in 43 of 51 states, although each state had an average of ten participating issuers during this year.
“In 2016, three issuers held 99 or 100 percent of the large group market in 7 states—Alabama, Alaska, Mississippi, Nebraska, North Dakota, South Carolina, and Vermont,” GAO said.
“The remaining issuers in each state often had significantly smaller market shares—on average, 6 of the 10 participating issuers in each state held less than 5 percent market share.”
These findings demonstrate the persistent concentration of issuers in the private health insurance market, GAO said. While the agency recognized prior efforts to curb this trend, particularly ACA’s health insurance exchanges, the results indicate that more federal and industry reform may be necessary to keep markets competitive and premiums low.
Date: April 02, 2019