The Health insurance exchanges enacted by the PPACA (i.e., ‘Health Reform’) are meant to bring competition to the small group and individual markets. These exchanges will begin in 2014. A GAO survey of States, however, found that the current small group health insurance market is very concentrated.
- There is significant market concentration. Twenty-seven states reported that the largest health insurer had more than 40 percent of the market whereas in only 12 states did the dominant carrier own less than 40 percent of the market. In 23 states, the top five plans captured 90 percent of more of the small group plan market share compared to only 16 where the top five carriers captures less than 90 percent of the market share.
- Blue Cross/Blue Shield is the dominant player. Of the 44 states reporting this information, BCBS was the largest carrier for small group health insurance plans for 36 of the states and was the second largest carrier for 3 states. In only 5 of the states did BCBS non rank as one of the top-2 carriers in terms of market share.
Health exchanges may not increase competition, but instead be a boon for the established players in the individual and small group markets.