Concentrated Markets, huh?

Thanks be to Bob for finding and posting the link to this article.

OK, so the AMA says “Competition in the health insurance industry is disappearing.” It cites growing “concentration” by market and pleads for “the Department of Justice (DOJ) and state agencies to more aggressively enforce antitrust laws that prohibit harmful mergers.”

The AMA report is not public unless you want to pay $150 for it or unless you are one of the 17% of doctors who belong to AMA. So at least a couple of questions come to mind:

1. In how many of those concentrated markets is the dominant player Blue Cross? I suspect the majority of them. And therefore I wonder if the AMA’s complaint is not really about some "absence of competition", but instead a complaint about Blue Cross. What makes Blue Cross such a popular choice for customers? And why does AMA care?

I also suspect the study shows there are in fact multiple competing insurance companies that dominate in different markets. Which prompts a second question:

2. Is it true that company A or C or U can be dominated by the Blues in some areas, but can dominate the Blues in other areas? Are they not the same companies with the same strengths everywhere? Yes? No? If one company is clearly dominant, why is there any competition at all, anywhere? If no company is clearly dominant, why is there “absence of competition”?

The only, or even the most likely, answers to these questions do not automatically involve “the absence of competition” or even the prevalence of “mergers”. (There are physician practice and hospital mergers too). And why should the only or even most desirable response be that “the Department of Justice (DOJ) and state agencies more aggressively enforce antitrust laws” ?

The answers to these questions are not stated in the AMA article and the study is not exactly public. Doesn’t it make sense that, before anyone accepts the AMA findings as described by some AMA spokesperson, AMA permit people to, you know, read the study itself to see whether it addresses these (and other) questions?

3. Finally, it’s a fact that physicians and hospitals agree to generally higher discounts for Blue Cross than they do for other insurers.

That's important because discounts affect net cost. The higher the discount, the lower the net cost. The lower the net cost, the more business an insurance company is likely to write.

So I wonder if doctor and physician negotiating behavior isn’t largely responsible for the Blue Cross cost advantage in the first place - which then leads to the greater market share that AMA is complaining about.

By setting up Blue Cross to win on lowest net cost, perhaps the doctors and hospitals have managed to channel the greatest number of patients to the very organization - Blue Cross - to whom they have given the greatest discounts. Doesn’t this cost the docs and the hospitals more? And then the AMA funds a study so they can complain about the "absence of competition". In the end, I wonder if the AMA is pushing this study as a means to defend their incomes, and not because of any “absence of competition” that is “not in the best economic interest of patients.” I wonder if the AMA isn’t worried more about the economic interests of doctors. I wonder if that isn’t the real reason AMA is so exercised about “concentrated” markets? (probable meaning: “Blue Cross has too many members”). I wonder.