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Health Insurance Competition Is Dwindling Posted: April 1st, 2010

By Megg Mueller

Megg Mueller is a journalist with almost two decades of experience. She has worked as a reporter and editor for the Reno Gazette-Journal, as editor of health care and education manuals and was an assistant travel editor for USATODAY.com.

Hey, where has all the health insurance competition gone?

Recently, health care took a controversial but historic turn with the passing of President Obama's health care reform bill. While the bill is an attempt to provide affordable health care to all Americans, one of the tenets of U.S. society is that competition breeds the best results and fairest pricing. But according to the American Medical Association (AMA), competition is all but disappearing from the health insurance industry.

The AMA's newly released edition of Competition in Health Insurance: A Comprehensive Study of U.S. Markets revealed that in 24 of 43 states the two largest insurers had a combined market share of 70 percent or more. In 2009, just 18 of 42 states had two insurers with a combined market share of 70 percent or more.

"The near total collapse of competitive and dynamic health insurance markets has not helped patients," said AMA President J. James Rohack, M.D. "As demonstrated by proposed rate hikes in California and other states, health insurers have not shown greater efficiency and lower health care costs. Instead, patient premiums, deductibles and co-payments have soared without an increase in benefits in these increasingly consolidated markets."

There is also concern that as they grow larger, insurance companies have more leverage over the type of care patients receive, and doctors are being undermined, Rohack wrote in a medical blog. Rohack also believes that as insurance companies have realized enormous profits, those dividends are not being passed along to patients in the form of lower rates.

But consolidation may not necessarily hurt consumers. Paul B. Ginsburg, President of the Center for Studying Health System Change, a nonpartisan health policy research organization based in Washington, was noted in a New York Times blog as stating that insurance consolidation isn't likely to affect a patient's access to providers. According to Ginsburg, large medical groups and hospitals have enough bargaining power to be included in multiple provider networks, and small physician practices, while unlikely to be included as providers in many plans, don't have as great an impact overall.

Megg Mueller