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5 States Where Health Insurers May Not Have Much Need for Agents

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Whales dominate the commercial health insurance markets in many states, and crowd out the guppies — but the overall U.S. competition picture may be about the same as it was a year ago.

The picture may also about the same as it was in 2008, when Congress began sketching out the legislation that created the current Affordable Care Act (ACA) commercial health insurance market framework.

Analysts with the American Medical Association (AMA) have published new state-by-state, and community-by-community, commercial health insurance market competition in a 2020 update to the AMA’s Competition in Health Insurance A Comprehensive Study of U.S. Markets.


  • A copy of the new AMA health insurer competition report is available here.
  • A copy of last year’s AMA health insurer competition report is avalable here.
  • An article about how the AMA used competition statistics to oppose a health insurer merger is available here.

The researchers have quantified commercial health insurance market concentration levels by calculating Herfindahl-Hirschsprung Index (HHI) scores for each community, and for each state.

The median 2019 HHI market concentration score for the entire country was 3,176, according to the new AMA report.

That’s down from a median of 3,211 in 2018, and it’s down from a median of 3,276 in 2008, when many Democrats and Republicans in Congress agreed that Congress needed to develop a health system change law that would increase the level of competition in the commercial health insurance market.

The score comparisons suggest that the U.S. health insurance market might have been about 1% less concentrated in 2019 than in 2018, and about 3% less concentrated in 2019 than in 2008.

HHI Scores

Federal antitrust regulators use HHI scores to decide whether a market has a healthy level of competition.

Scores can range from close to 0 to 10,000. A market with an infinite number of competitors with equal market share would get a score of 0. A market in which one player gets all of the business would have an HHI score of 10,000.

The AMA cares about commercial health insurance market HHI scores because it contends that health insurers in more concentrated markets are more likely to pay doctors less and be less responsive to doctors’ concerns.

Health insurers and their defenders contend that, in many cases, market concentrations are high because the commercial health insurance markets in some communities are not very profitable, and because health care providers, employers, patients and producers in those states may prefer to do business with one big, well-known, trusted carrier.

Health insurers also contend that they need to be big to have a chance of negotiating good prices, because the Medicare and Medicaid programs are so much bigger than any one commercial health insurer.

Why Financial Professionals Might Care

Health insurance agents might compare about market concentration because, in theory, all other factors being held constant, insurers in more concentrated markets may have less incentive to use insurance agents, and less incentive to pay agents attractive competitions.

Agents may also be able to hire their own consultants to develop similar HHI analyses for the life insurance market, the annuity market and related markets, such as the disability insurance market.

Changes Over Time

The AMA has made analyzing trends in HHI scores difficult, by pulling all earlier market concentration report updates off the web.

Martin Gaynor published median AMA HHI figures for 2004 through 2008 here.

Gaynor’s paper shows that, during that five-year period, when Congress was becoming concerned about health insurance market concentration, median U.S. HHI scores varied from 2,986 to 3,748.

Concentrated States

For a look at the five states with the HHI scores for 2019, see the slideshow above. Wiggle your pointer over the first slide to make the control arrows show up.

— Read Economist: Hospital, Payer Consolidation Hurting Marketon ThinkAdvisor.

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