Medical Association: Delaware lacks in health insurance competition

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health insuranceDelaware has made the  American Medical Association’s  annual list of 10 states with the least competitive commercial health insurance markets.

The lack of competition means consumers and employers in Delaware have fewer choices among commercial health insurers than consumers and employers in almost all other states, the association stated.

According to the AMA’s newly released Competition in Health Insurance: A Comprehensive Study of U.S. Markets, the two largest health insurers in Delaware are Blue Cross Blue Shield of Delaware and Aetna.  The combined  companies controlled 82 percent of the state’s commercial health insurance market in 2012.

The study also examined Delaware’s metropolitan areas and found that the least competitive health insurance market was in Wilmington where Blue Cross Blue Shield of Delaware had a 76 percent market share, according to an AMA spokesman.Highmark  Delaware issued the following statement:

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Highmark Delaware supports a competitive marketplace for health insurance. Despite the strong local and national competition we face, our members consistently choose Blue Cross Blue Shield because of our product selection, extensive provider networks, excellent customer service and commitment to help them manage their healthcare choices and decisions. In this reform environment, Highmark Delaware is utilizing its strong membership to collaborate with providers and build value-based programs that make a positive impact on the quality and affordability of care.”

Cited, in the past,  as the reasons  for the current competitive landscape  are  the long-time dominance of High Mark Blue Cross and Aetna, as  well as medical costs that run 25 percent above the national norm and hosptial health care systems with large market shares.

The state’s small size is also viewed as a factor, since regulatory costs can be comparable regardless of the state’s size.

In comments at a meeting of the local chapter of the National Association of Women Business Owners, Rita Landgraf, secretary of the state Department of Health and Social Services cited the lack of players in the market as a factor in the state’s health care costs. She also sees  the high rate of chronic diseases and high obesity rates as contributing to the  cost spiral.

“The AMA is greatly concerned that in 41 percent of metropolitan areas, a single health insurer had at least a 50 percent share of the commercial health insurance market,” said AMA President Robert M. Wah, M.D in commenting on the study.  “The dominant market power of big health insurers increases the risk of anti-competitive behavior that harms patients and physicians, and presents a significant barrier to the market success of smaller insurance rivals.”

The AMA’s latest findings regarding competition in the health insurance industry include:

A significant absence of health insurer competition was found in 72 percent of the metropolitan areas studied. These markets are rated “highly concentrated,” based on the guidelines used by the U.S. Department of Justice and Federal Trade Commission to assess the degree of competition in a given market.

Seventeen states had a single health insurer with a commercial market share of 50 percent or more.

Forty-five states had two health insurers with a combined commercial market share of 50 percent or more.

The 10 states with the least competitive commercial health insurance markets were: 1. Alabama, 2. Hawaii, 3. Michigan, 4. Delaware, 5. Louisiana, 6. South Carolina, 7. Alaska, 8. Illinois, 9. Nebraska and 10. North Dakota. Illinois has made its first appearance in the annual AMA list, displacing Rhode Island from last year’s list. Louisiana entered the top 5, moving from ninth  on last year’s list.

The new AMA report is intended to help researchers, lawmakers, policymakers and regulators identify markets where mergers and acquisitions among health insurers may cause competitive harm to patients, physicians and employers.

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