AMA: 97% of U.S. commercial markets highly concentrated in 2024

A handful of health insurers are maintaining a stronghold on the commercial and Medicare Advantage markets, leading to less competition, rising costs and fewer choices for patients, according to a new study released by the American Medical Association. Under federal merger guidelines, 97% of metropolitan statistical area markets were highly concentrated in 2024, up from 95% in 2014. 

The AMA analyzed the state of competition in health insurance in 2024 by assessing data across 384 metropolitan areas, all 50 states and Washington, D.C. Federal merger guidelines issued in 2023 define a market as "highly concentrated" if its Herfindahl-Hirschman Index (HHI) -- a standard measure of market concentration -- exceeds 1,800 points. 

Key findings

The study found that, in 91% of metropolitan statistical area-level (MSA) markets, at least one insurer has a commercial market share of 30% or greater. In 47% of markets, one insurer's share was at least 50%. 

Medicare Advantage markets were also highly concentrated at 97% in 2024, down from 99% in 2017. 

More than half of the markets included in the study experienced an increase in HHI in the past decade. For a quarter of those markets, the HHI increase was at least 500 points. 

"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 study stated.  

"Both consummated and proposed mergers and acquisitions involving health insurers should raise serious antitrust concerns." 

In addition to mergers and acquisitions shrinking competition, high barriers to entry make it difficult for new competitors to enter the market. This enables existing insurers to exercise market power. 

Largest insurers by market share 

There has been little change in the past decade in terms of insurers' commercial market shares at the national level. UnitedHealth Group, Elevance Health, CVS (Aetna) and Cigna have maintained the largest shares in the national market.  

"However, this is because there are very few 'national' insurers," the AMA noted. "Most insurers; enrollments are concentrated geographically, as they are licensed in a single state, while a small number are regional and operate in a few states." 

At the local level, market shares are much higher. For example, most Blue Cross Blue Shield (BCBS) insurers are licensed in individual states. As such, BCBS has a small footprint at the national level, but holds the largest market share in 43 states and 84% of MSAs. If one were to combine BCBS insurers into one firm, the AMA noted, it would yield national-level market shares of 43% in 2024. 

The 10 states with the least competitive commercial health insurance markets were Alabama, Kentucky, Hawaii, Michigan, Louisiana, Illinois, Alaska, Vermont, Delaware and West Virginia. 

Within Medicare Advantage markets, UnitedHealth Group maintained the largest market share (30%), followed by Humana, CVS, Kaiser Permanente and Elevance Health. In 90% of metro areas, at least one insurer maintained a market share of 30% or greater. 

The 10  with the least competitive Medicare Advantage markets were Wyoming, Washington, D.C., Rhode Island, Montana, Nebraska, Utah, West Virginia, Mississippi, Oklahoma and Louisiana. 

Overall, the study found that the majority of U.S. health insurance markets remain highly concentrated, and insurers are increasingly expanding their reach by entering other healthcare markets, merging services and making entry for new players even more difficult. 

“When one or two companies call the shots, premiums rise, options shrink, and patients suffer," John J. Whyte, M.D., AMA CEO and executive vice president, said in a press release accompanying the study. "Strengthening competition -- not consolidation -- is the path to lower costs and improved access.” 

Jill Hughes has covered healthcare cybersecurity and privacy news since 2021.