Blue Cross market share represents ‘near monopoly,’ according to AMA


Image via

The American Medical Association in Chicago released a study Wednesday showing that “anticompetitive market power is widespread for each of the three most popular managed care plans in the U.S.,” and Blue Cross Blue Shield of Michigan has a “near-monopoly.”

Andy Hetzel, vice president of corporate communications at BCBSM, countered that the AMA has an “annual tradition of taking a look at Blue market share around the country and then declaring the markets where Blue plans have a larger market share, as being uncompetitive. But that 30,000-foot view really doesn’t take into account the reality of the marketplace on the ground.”

AMA spokesperson Robert J. Mills said in an email to the Business Journal that “Michigan has the third least competitive commercial health insurance market in the nation,” according to data contained in the AMA’s 2012 edition of Competition in Health Insurance: A Comprehensive Study of U.S. Markets.

The AMA said it is the largest analysis of its kind, reporting commercial health insurance market shares and market concentration levels for 385 metropolitan areas in all 50 states and the District of Columbia.

“It appears that consolidation has resulted in the possession and exercise of health insurer monopoly power,” the study states, allegedly “pointing to increased premiums, watered-down benefits and insurers’ growing profitability as evidence that highly concentrated markets harm patients and physicians.”

Mills said BCBSM “has a near-monopoly in the PPO (preferred provider organizations) product market, accounting for 85 percent of the state market share. This anticompetitive market share pushed Michigan to second on the list of states with the least competitive PPO markets.”

According to the AMA’s annual analysis, BCBSM accounts for 69 percent of Michigan’s overall commercial health insurance market. Near-monopolies were found in several of Michigan’s geographical markets, said Mills, stating that in the overall commercial health insurance market, BCBSM has market shares greater than 70 percent in Ann Arbor, Battle Creek, Bay City, Flint, Jackson, Niles-Benton Harbor and Warren-Farmington Hills-Troy.

In the HMO product market, BCBSM has market shares of 93 percent in Battle Creek and 85 percent in Kalamazoo-Portage. Priority Health has market shares of 86 percent in Holland-Grand Haven and 81 percent in Grand Rapids.

In the PPO product market, BCBSM has market shares greater than 80 percent in Ann Arbor, Battle Creek, Bay City, Flint, Jackson, Kalamazoo-Portage, Lansing-East Lansing, Monroe, Muskegon-Norton Shores, Niles-Benton Harbor, Saginaw and Warren-Farmington Hills-Troy.

In the point-of-service plan product market, Sparrow Health System has a market share of 82 percent in Lansing-East Lansing.

The report also concluded that anti-competitive conditions are present in 70 percent of the 385 metropolitan areas around the country. In about 40 percent of the metropolitan areas studied, at least one health insurer had a commercial market share of 50 percent or greater.

Hetzel referred to the Michigan insurance commissioner’s report in May 2010 on the state of competition in the small employer insurance. Commissioner Ken Ross said then that there was “a reasonable degree of competition” in Michigan’s small employer market, which Hetzel described as a “robust market where there is healthy competition among carriers.”

He added that based on BCBSM’s business experience, there is “healthy competition going on in both the small group market … and in the large employer market,” where BCBSM competes with large national carriers like Aetna and United Healthcare.

Facebook Comments