Arkansas sees decrease in competition in health insurers from 2017

Half of all states, including Arkansas, saw decreasing competition among commercial health insurers in 2017 compared to the year before, according to a study released Wednesday by the American Medical Association.

The 2018 edition of the AMA’s study Competition in Health Insurance, showed a majority of health insurance markets are highly concentrated, which have led to waning marketplace competition in 25 states. Reasons for the decline vary by state, but the activity in the study suggested excessive market power that has resulted in “competitive harm to consumers and providers of care.”

“The slide toward insurance monopolies has created a market imbalance that disadvantages patients and favors powerful health insurers,” AMA President Barbara L. McAnen said in a statement Wednesday.

Of the states that reported the largest declines in competition, and thus increased consolidation, Arkansas had the seventh-largest decline in the study. North Dakota reported the largest, followed by Alaska and Louisiana.

“There is already too little competition among insurers, to the detriment of patients,” McAnen said about prospective health insurance mergers. “Networks are already too narrow, and premiums are already too high.”

The study, based on 2017 data, uses a federal metric known as the Herfindahl-Hirschman Indices (HHI) to determine the concentration of health care providers by state and region. If the figure is above 2,500, the area is considered highly concentrated with a few providers dominating the market. Moderately concentrated markets score between 1,500 and 2,500. Unconcentrated makets score below 1,500.

Overall health care concentration rose 227 points to 3,055 in Arkansas for the period, compared to 2016, according to the most recent AMA report.

Recent data shows about 65 percent of the state’s health insurance market is comprised of two entities: Arkansas Blue Cross and Blue Shield (49 percent) and United Health Group (16 percent).

After looking at the report, David Wroten, executive vice president of Arkansas Medical Society, said the reason for the change is difficult to nail down, but pointed to United Health’s exit from Medicaid last year as a possible explanation.

“A good bet is because of United Health not participating in the Medicaid expansion of the Arkansas Works program,” Wroten said.

United Health’s 2017 departure displaced nearly 200,000 Arkansans, he said. And Blue Cross, the state’s largest insurer and Medicaid participant, likely, picked them up.

AMA studies show United Health’s state market share is 16 percent, a 2 percent decline from 18 percent posted in last year’s report, which reflected 2016 data. Meanwhile, Blue Cross and Blue Shield’s state market share rose 2 percent for the period.

“It definitely means the largest player is getting larger,” Wroten said.

Blue Cross and Blue Shield holds about a 50 percent share of the market in Hot Springs, Jonesboro, Northwest and Central Arkansas, according to the 2018 study. Cigna holds a 48 percent share in Pine Bluff.

Regarding market consolidation, Wroten said a competitive decline doesn’t explicitly mean an insurer has left the state.

“People make the decision [to change insurance provider] based on price, and if other carriers’ premiums are getting higher” and customers switch to a cheaper premium provided by a larger carrier then “ergo, competition is reduced,” he said. “It’s not that we’ve lost players.”