Michigan Association of Health Plans

Michigan falls in state ranking of health insurance competition

By: Rick Murdock

We’re number 3!

And that’s not good.

The latest American Medical Association (AMA) annual review of health insurer competition found that Michigan has the third least competitive health insurance market in the nation – and that’s up (down? It’s worse!) from having the fourth least competitive market in the 2013 report. The “bottom 10” list of competition looks like this, according to the AMA:

1. Alabama, 2. Hawaii, 3. Michigan, 4. Delaware, 5. Louisiana, 6. South Carolina, 7. Alaska, 8. Illinois, 9. Nebraska and 10. North Dakota.

According to the AMA press release on the report, “The study is based on 2012 data captured from commercial enrollment in fully and self-insured plans, and includes participation in consumer-driven health plans.”

“The AMA is greatly concerned that in 41 percent of metropolitan areas across the country, a single health insurer had at least a 50 percent share of the commercial health insurance market,” said AMA President Robert M. Wah, M.D. “The dominant market power of big health insurers increases the risk of anti-competitive behavior that harms patients and physicians, and presents a significant barrier to the market success of smaller insurance rivals.”

Here in Michigan, we could once again review the legacy issues outlining why we have a lack of competition for commercial health insurance. But the AMA report does that for me by highlighting the practices of “dominant” carriers — practices, as the AMA noted, that mean higher prices for patients, lower payments to hospitals and physicians, and less opportunity for job growth by competitors.

At MAHP we take this “ranking” seriously.  Our Strategic Plan and Vision for 2020 is that Michigan becomes one of the top ten competitive states.  The AMA report simply creates more of an urgency to take all necessary steps to change this status. Early next year, we will be proposing a series of strategies and interventions that Michigan must take if we want to move from being one of the worst to being one of the best in terms of competition.  These strategies will be designed to create a more competitive insurance marketplace in Michigan, and we assume this is an objective shared by the Administration and our Legislature — free market approach and fair competition.

But for now, the important news is that “We’re number 3…and that’s not good.”  Moreover, lets make sure that where we have true competition — in the Medicaid market, that we take every step possible to nuture and build upon that model—and in the emerging public insurance exchange we continue to nuture its growth.