Report: Almost three-quarters of U.S. health insurance markets highly concentrated

A NEW American Medical Association study finds highly concentrated health insurance markets have grown even more so over the past five years, a trend the trade group said can harm consumers and providers alike.

Health insurance markets were highly concentrated in 74% of the country’s metropolitan statistical areas in 2019, up from 71% in 2014. More than half of markets saw upticks in health insurer consolidation during that time, according to the report, the 19th edition of the AMA’s research on the subject.

“For many of the 70 million Americans who live in highly concentrated health insurance markets, a lack of competition is a problem that keeps getting worse as consumers have more limited health insurance options,” AMA President Dr. Susan Bailey said in a statement.

The report used a measure called the Herfindahl-Hirschman Index to determine market concentration. An HHI of more than 2,500 indicates a highly concentrated market. Out of all 384 metro statistical areas in 50 states plus Washington, D.C., the report found the average market HHI was highly concentrated, at 3,473. The median HHI was 3,176.

Between 2014 and 2019, the report found an average HHI increase of 151 points; 17% of markets experienced HHI increases of at least 500 points. Of markets that were not highly concentrated in 2014, one-quarter experienced HHI upticks large enough to deem them highly concentrated by 2019.

The study broke down its results by the type of insurance product, including health insurance exchanges created by the

Affordable Care Act. Leemore Dafny, a Harvard Business School professor of business administration, said those findings square with those in her own research finding less competition in health insurance marketplaces, which are subsidized by the federal government. The average HHI in the exchanges was 6,623, and 99% of them are considered highly concentrated, according to the report.

The AMA did not comment beyond its report, which encouraged a dialogue among regulators, policymakers, lawmakers and others about the need for a more competitive marketplace.

“Our findings should prompt federal and state

“For many of the 70 million Americans who live in highly concentrated health insurance markets, a lack of competition is a problem that keeps getting worse as consumers have more limited health insurance options.” Dr. Susan Bailey, AMA president

antitrust authorities to vigorously examine the competitive effects of proposed mergers between health insurers,” the report said.

The report said that 57% of physicians providing patient care are in practices with 10 or fewer physicians. Under antitrust law, independent physicians can’t negotiate collectively with insurers, an imbalance that leaves most physicians with weak bargaining positions relative to commercial insurers.

The report noted that health insurance mergers went largely unchallenged before the proposed 2007 merger of Independence Blue Cross and Highmark. That deal was called off because the Pennsylvania Insurance Department added a condition that one of them must drop its Blues brand. Three years later, Blue Cross and Blue Shield of Michigan scrapped its acquisition of Physicians Health Plan of Mid-Michigan after the U.S. Justice Department said it would sue to block it.

In 2015, Anthem attempted to acquire Cigna and Aetna sought to acquire Humana. Both deals were abandoned after lawsuits from the Justice Department and multiple attorneys general.

America’s Health Insurance Plans has for years highlighted reports on rising healthcare costs that result from vertical provider consolidation. AHIP spokesman David Allen said in a statement that the key to negotiating lower prices is competition among doctors and hospitals, which means hospital market consolidation is a key concern.

Dafny agreed that providers aren’t off the hook for their role in driving up healthcare costs.

“Provider prices are high and climbing,” she said. “There is finger-pointing going on in both directions, and I feel the consumers end up being the losers because both provider prices and premiums are going up.” ●

ALLSCRIPTS Healthcare Solutions is selling its care-coordination subsidiary CarePort Health to WellSky, the companies announced last week.

WellSky, which develops software tools for post-acute care providers, has entered into a definitive agreement to acquire CarePort for $1.35 billion, representing more than 13 times CarePort’s revenue over the last 12 months and roughly 21 times the company’s adjusted earnings before interest, taxes and amortization. CarePort represents roughly 6% of Allscripts’ revenue.

Allscripts and WellSky, which is owned by private equity firms TPG Capital and Leonard Green & Partners, expect the sale to close before year-end.

WellSky officials said buying CarePort, which connects acute-care and post-acute care providers and payers, will better position the company to manage the acute-care discharge process, as well as tracking for patients across post-acute care settings. Under the deal, CarePort’s customers and employees will transition to WellSky.

Allscripts will use proceeds from the sale to “invest in its solutions, further deleverage the company’s balance sheet and support significant share repurchases,” according to a news release.

Also last week, Allscripts asked a federal court to void a telemedicine company’s trademark for the name CarePortMD, arguing it’s too similar to a trademark it holds for CarePort.

Allscripts in its complaint accused CarePortMD, a Newark, Del.-based telemedicine and urgent-care company that formerly did business as ER at Home, of trademark infringement, false designation of origin and unfair competition.

Allscripts has held a trademark registration for CarePort since November 2013. CarePortMD has been using that name since July 2018 and has held a trademark on it since September 2018, according to the registration held at the U.S. Patent and Trademark Office.

Dr. Ashok Subramanian, CarePortMD’s CEO, in an email said the company followed patent office guidelines to obtain its trademark registration. Allscripts did not immediately respond to a request for comment. ●