← Back to Insights
November 9, 2022
Authors
David Burda
Topics
Consumerism Economics System Dynamics
Channels
Blogs

Medicare Advantage Markets Are More or Less Competitive

If you read the headline of this blog post in the form of a question, the answer, I think, is both.

That’s my interpretation of some interesting health insurance market stats in the American Medical Association’s latest Competition in Health Insurance: A Comprehensive Study of U.S. Markets report.

If you’re into healthcare market competition like me, the annual report from the AMA is a real page-turner. If you’re not, the 78 pages will put you to sleep by the second page of the introduction.

For the first time, the report included health insurance market data for Medicare Advantage plans, the alleged money-saving Medicare privatization experiment that’s costing Medicare more money because MA plans have figured out how to game the MA payment formula.

AMA researchers analyzed MA plan market shares in 380 metropolitan statistical areas in 50 states to come up with the following:

  • 79% of the MSAs were “highly concentrated” in terms of MA plan market shares, under the antitrust guidelines used by the U.S. Justice Department and Federal Trade Commission. Highly concentrated essentially means few competitors and not much competition.
  • In 91% of the MSAs, at least one MA plan controlled more than 30% of the market.
  • In 34% of the MSAs, at least one MA plan controlled more than 50% of the market.
  • And in 6% of the MSAs, at least one MA plan controlled more than 70% of the market.

“High concentration levels in health insurance markets are largely the result of consolidation (i.e., mergers and acquisitions) which can lead to the exercise of market power and, in turn, harm to consumers and providers of care,” the AMA said in the report. “Conceptually, mergers and acquisitions can have beneficial and/or harmful effects on consumers. However, only the latter has been observed.”

What a classic dry burn from the AMA! I’m sure the writers were snickering over that one.

Anyways, that’s the bad news, and it could help explain why MA plans are breaking the Medicare bank. Not only are they manipulating the payment formula, but there’s also virtually no one to stop them in a market scarce with competitors. No one to say, “Join our plan! We’re not cheating taxpayers!!”

To the AMA’s credit, it did acknowledge that the percentage of highly concentrated MA dropped a bit since 2017. That year, 87% of the MSAs were highly concentrated in terms of MA plan market shares compared with 79% in 2021.

I guess that’s the good news. Things are slightly less anti-competitive.

To learn more about this topic, please read “It’s Your Move: Health Insurers Counter Provider Consolidation,” on 4sighthealth.com.

Thanks for reading.

About the Author

David Burda

Dave Burda began covering healthcare in 1983 and hasn’t stopped since. Dave writes this monthly column “Burda on Healthcare,” contributes weekly blog posts, manages our weekly newsletter 4sight Friday, and hosts our weekly Roundup podcast. Dave believes that healthcare is a business like any other business, and customers—patients—are king. If you do what’s right for patients, good business results will follow.

Dave’s personal experiences with the healthcare system both as a patient and family caregiver have shaped his point of view. It’s also been shaped by covering the industry for 35 years as a reporter and editor. He worked at Modern Healthcare for 25 years, the last 11 as editor.

Prior to Modern Healthcare, he did stints at the American Medical Record Association (now AHIMA) and the American Hospital Association. After Modern Healthcare, he wrote a monthly column for Twin Cities Business explaining healthcare trends to a business audience, and he developed and executed content marketing plans for leading healthcare corporations as the editorial director for healthcare strategies at MSP Communications.

When he’s not reading and writing about healthcare, Dave spends his time riding the trails of DuPage County, IL, on his bike, tending his vegetable garden and daydreaming about being a lobster fisherman in Maine. He lives in Wheaton, IL, with his lovely wife of 35 years and his three children, none of whom want to be journalists or lobster fishermen.

 

Recent Posts

Consumerism
Podcast: Cancer Screenings, Cases and Mortality Rates 12/1/22
Mixed Messages  We tried to make sense of the contradictory trends in oncology care and outcomes on the… Read More
By December 1, 2022
Consumerism
Five Healthcare Lessons for Employers if They Read to the Bottom
As you know, it’s open enrollment season. It’s kind of like hunting season, but in this case you’re… Read More
By November 29, 2022
Consumerism
Podcast: Arizona, Oregon Voters Pass Healthcare Affordability Measures 11/17/22
The Votes are In  Are state ballot initiatives the right way to make medical care more affordable? Two… Read More
By November 17, 2022