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Private Health Insurance Market Competition Has Weakened: GAO

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A bar chart showing that the number of highly concentrated individual major medical markets started at 33, in 2011, climbed to 41, when the ACA exchange system came to life, fell below 40 for three years, then spiked up to 46, in 2018. (Credit: GAO)

The level of competition in the U.S. commercial health insurance market has dwindled since 2010, when the Affordable Care Act (ACA) came to life.

Analysts at the GAO have published data supporting that conclusion in a new private health insurance market concentration study.

The analysts prepared the report because of an ACA provision that requires the GAO to brief Congress on health insurance market concentration every two years. ACA drafters hoped the new programs and subsidies created by the new law, such as the ACA public exchange program, and the Consumer Operated and Oriented Plan Program, would cut the cost of health coverage, and improve the quality, by increasing the level of competition.


  • A copy of the GAO analysis of private health insurance market concentration is available here.
  • An article about an American Medical Association analysis of competition in the commercial health insurance sector is available here.

The analysts who prepared the new report look only at the period from 2011 through 2018, for all 50 states and the District of Columbia.

For some sections of the report, they use data from, the agency that operates ACA public exchange services for states that are unwilling or unable to set up their own ACA public exchange programs. The analysts do not look directly at the impact of or other ACA programs, or at the effects of efforts by members of Congress and the administration of President Donald Trump to limit or shut down ACA subsidy programs.

The Numbers

The GAO analysts defined a market as being highly concentrated if the top three issuers in the market accounted for 80% or more of the enrollment in that market.

In the individual major medical insurance market, for example, in 2011, 33 of the 51 jurisdictions studied had highly concentrated markets.

The number of highly concentrated markets increased to 41 in 2014, when the ACA exchange market came to life.

The number of highly concentrated markets fell to 37 in 2015 and 2016, increased to 39 in 2017, and then rose to 46 in 2018.

The level of market concentration increased the most in Indiana, Washington state and Texas and decreased the most in Ohio, Colorado and Kansas, according to the GAO analysts.

Similarly, the number of jurisdictions with highly concentrated small-group major medical insurance markets increased to 46 in 2018, from 36 in 2011.

In the large-group market, the number of highly concentrated jurisdictions increased to 43, from 40.

The Context

The American Medical Association (AMA) published a separate analysis of competition in the health insurance market in October.

The AMA analysts used another measure of market concentration, Herfindahl-Hirschsprung Index (HHI) scores.

HHI scores can range from 0, for a market with an infinite level of competition, up to 10,000, for a market where one player captures all share.

The AMA found that the median 2019 HHI market concentration score for the entire country was 3,176. That was down from 3,211 in 2018, and down from 3,276 in 2008. The AMA figures indicate that the overall U.S. commercial health insurance market concentration level was a little lower in 2019 than in 2018 or in 2008.

The gap between the AMA numbers and the GAO numbers could be due partly to the fact that the analysts calculated market concentrations level for different sets of years.

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

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