A study released this week
by the American Medical Association (AMA) sheds light on competition in the health insurance industry across the country, concluding that highly concentrated markets are on the rise. The results for Wisconsin show a mixed picture, with the state as a whole remaining largely competitive, but with many areas within the state designated as moderately or even highly concentrated.
The study uses a measure of market concentration—the Herfindahl-Hirschman Index (HHI)—which is used by the Department of Justice and Federal Trade Commission in assessing whether a proposed merger would have anticompetitive effects. The effects of higher concentration and lower competition for enrollees includes higher premiums and diminished access to coverage and care, and can also mean lower payments for providers.
The analysis is based on enrollment in fully insured and self-insured commercial products. For each state and metropolitan statistical area (MSA), the results are reported for HMO, PPO, Exchange and POS markets separately and then as a combined total for those product markets. The study shows the percent market share of the top two insurers in these categories, as well as a numerical value that indicates market concentration for the geographic area.
Wisconsin’s combined HHI value indicates an unconcentrated market. However, the HHI values found in most MSAs in Wisconsin are in the moderately concentrated range, while a few MSAs are categorized as highly concentrated. An example of a highly concentrated market is the Milwaukee-Waukesha area, where UnitedHealth Group has a market share of 46% and Anthem has a market share of 23%. The HHI for Racine and Sheboygan indicates those markets are highly concentrated.
Nationally, UnitedHealth Group had the largest market share in both 2014 and 2020, with Anthem coming in second in both years. For Wisconsin, in 2020, the top-two insurers across the combined product markets are also UnitedHealth Group and Anthem, a BCBS affiliate, with 26% and 20% market share respectively. BCBS or one of its affiliates is also the largest insurer in the surrounding states of Illinois (60% market share), Indiana (56%), Iowa (46%), Michigan (68%), Minnesota (45%) and Ohio (33%), while UnitedHealth Group is number two in Illinois (14%), Indiana (15%) and Iowa (29%).