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Four out of five metropolitan areas in the United States lack a competitive health insurance market, according to a report by the American Medical Association (AMA).

The report, which examined 368 metropolitan markets and 48 states, found enrollment in insurance plans to be "highly concentrated" in 83 percent of metro areas. In about half of the nation's metro areas, at least one health insurer claimed 50 percent of the market or more. In 24 states, the two largest health insurers have a lock on 70 percent of all policies sold.

The study spotlights the "anti-competitive market clout that some health insurers have gained through mergers and acquisitions," said AMA President Peter W. Carmel in a prepared statement.

It also raises anti-trust concerns, say its authors, who call for greater scrutiny by federal and state authorities.

"There have been no observed benefits from consolidation," the study concludes, pointing to rising premiums, watered-down benefits and insurers' growing profitability as proof that concentrated markets harm consumers and providers of health care.

But the market in Utah throws a wrench in that argument.

This may come as a surprise, but the Beehive state doesn't rank among those with the most highly concentrated insurance markets: Alabama, Alaska, Delaware, Michigan, Hawaii, District of Columbia, Nebraska, North Carolina, Indiana and Maine.

In Alabama, BlueCross BlueShield claims 90 percent of all HMO (managed care) and PPO (preferred provider) policies sold, according to the AMA study. In Utah, by comparison, the market leader — Intermountain Healthcare's insurance arm SelectHealth — claims 47 percent.

But in managed care, SelectHealth is king, with 82 percent of all HMO policies, which some say has benefitted consumers through lower-than-average prices.

"Intermountain does provide a good model for integrated health care," acknowledged Taylorsville Republican Rep. Jim Dunnigan, an insurance broker.

The hospital chain is Utah's largest and extends the steepest discounts to SelectHealth as its own insurer, which "sets the bar for other carriers," said Dunnigan. "Economies of scale are not a bad thing. But I don't think we want one or two carriers. We want a market where several carriers can thrive."

Nationally more economists, however, have been challenging the theory that competition benefits consumers.

"The widely held notion that more insurers in a market area will reduce the premiums paid by the insured is not supported by either economic theory or empirical research," argued Princeton economics professor Uew Reinhardt last November in a guest editorial in The New York Times.

He points to a study that suggests hospitals are better poised to control prices. It showed that while health insurer concentration reduces prices, hospital market concentration, which is far more common in most states, results in higher prices.

Of course, as the AMA study points out, it's possible that a dominant insurer could flex its monopolistic muscle to reduce payments to doctors and hospitals. That, in turn, could undermine the quality of care and reduce access to care as college graduates shun medicine for more lucrative fields.

Also, health reform advocates argue that just because Intermountain and SelectHealth have acted in good faith so far, doesn't mean the non-profits will continue to do so.

The tide could shift with a simple change in management, which is why legal and regulatory safeguards are so necessary, said Shelly Braun, a policy analyst at the Utah Health Policy Project.

For now, competition in Utah waxes and wanes from year to year as insurers abandon or seek to enter the market. Dunnigan would welcome more carriers but says overall the state's market is very competitive.

"When you can quote five or six competitive health plans, that's a good offering to the employer," he said.

Twitter: @kirstendstewart

AMA study dissected

The American Medical Association took 2009 enrollment data reported by the nation's health insurers to HealthLeaders-InterStudy, a company in Nashville, Tenn. that analyzes the health industry.

Data span HMO and PPO [preferred provider organization] plans; only self-insured employers that administer their own insurance are excluded from the report.

In defining "highly concentrated" markets, the study uses newly-revised Horizontal Merger Guidelines issued last year by the U.S. Department of Justice and Federal Trade Commission. —

AMA study dissected

The American Medical Association took 2009 enrollment data reported by the nation's health insurers to HealthLeaders-InterStudy, a company in Nashville, Tenn. that analyzes the health industry.

Data span HMO and PPO [preferred provider organization] plans; only self-insured employers that administer their own insurance plans are excluded from the report.

In defining "highly concentrated" markets, the study uses newly-revised Horizontal Merger Guidelines issued last year by the U.S. Department of Justice and Federal Trade Commission.