April 17, 2006: Study Finds Health Care Companies Becoming Near-Monopolies

A study conducted by the American Medical Association (AMA) finds that health insurance companies are becoming near-monopolies. Ninety-five percent of the 294 HMO/PPO metropolitan markets surveyed have a Herfindahl-Hirschman Index (HHI) above 1,800. The HHI is used to determine whether a company’s control of the market warrants antitrust concern. A market with a rating of 1,800 is considered by the Department of Justice to be “highly concentrated.” Sixty-five percent of the companies surveyed have a rating over 3,000. The concentration is apparently the product of a period of intense consolidation within the industry. According to the AMA, there were more than 400 mergers during the preceding ten years. [American Medical Association, 2006 ; Associated Press, 4/18/2006] “Patients do not appear to be benefiting from the consolidation of health insurance markets,” says AMA board member Dr. J. James Rohack. “Health insurers are posting historically high profit margins, yet patient health insurance premiums continue to rise without an expansion of benefits.” [Consumer Affairs, 4/18/2006] The AMA has asked the Department of Justice to take up antitrust action. But the organization says that in spite of the extremely high market concentration, regulators seem uninterested. [Associated Press, 4/18/2006]