Mobile, Ala.-Lang ago was Dr. Richard Menger, a neurosurgeon, ready to operate on a 16-year-old with complex scoliosis. A team of doctors had spent months preparing for the operation, consulting orthopedists and cardiologists, even printing a 3D model of the teenager’s spine.
The operation was planned for a Friday when Menger got the news: the teenager’s insurer, Blue Cross Blue Shield from Alabama, had denied the reporting about the operation.
It was not very surprising for Menger, who has been practicing in Alabama since 2019. Alabama essentially has one private insurer, Blue Cross Blue Shield from Alabama, who have no less than 94% of the market for insurance plans for large groups, according to The Non -Profit KFF health policy. That dominance enables the insurer to consistently refuse claims, many doctors say, people charge more for coverage and pay lower rates to doctors and hospitals than in other states.
“It increases the natural problems for insurance much more because there is no market competition or choice,” says Menger, who in 2023 a on-ed in 1819 NewsA local news site, with the argument that the termination of Blue Cross Blue Shield of Alabama’s health insurance Monopoly would make people in the state healthier.
Blue Cross Blue Shield from Alabama also has most of the individual insurance plans in the state, according to facts of the Centers for Medicaid & Medicare Services. Maybe not coincidentally, Alabama also had the Highest denial percentages For in-network claims of insurers on the individual market in 2023, according to a KFF analysis: 34%. Buurly Mississippi, where the majority insurer has less of the market share with 81%, has an average refusal percentage of 15%.
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Alabama is an extreme matter, but people in many other states are also confronted with monopolies of health insurance. An insurer, premera blue cross Group, has a 94% share in the large group market in Alaska, and Blue Cross Blue Shield from Wyoming has a market share of 91% in that state. In 18 states, one insurer has 75% or more of the market for health insurance in large groups, according to KFF data.
These monopolies increase the costs, says Leemore Dafny, a professor at the Harvard Business School and Harvard Kennedy School who has long studied competition between health insurance companies and providers.
“More competitors tend to offer lower premiums and more generous benefits for consumers,” she says. “There is a lot of concern for analysts such as me about concentration in different sectors, including health insurance.”
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Bruce A. Scott, the direct former president of the American Medical Association, has said that when the dominant insurer in his state of Kentucky again negotiated his contract with his medical group, the lower rates than six years earlier had paid. “This same type of financial squeeze game is found nationally and its frequency has been exacerbated by consolidation of health insurance,” he written in Hill in 2023.
What happened to competition? There used to be many more regional insurers, says Dafny. But when the costs began to rise, they did not have enough leverage to negotiate prices with providers and remain profitable. As a result, many were happy to be taken over by larger companies. Subsequently, hospitals and doctor’s offices merged to get more leverage against the larger insurers. Now there is a lot of concentration among both provider groups and insurers.
“None of this had anything to do with taking better care of patients,” she says. “It had to do with trying to get the upper hand.”
In a statement until time, Blue Cross Blue Shield from Alabama said it worked to make the earlier authorization process more transparent and to turn the requirement of prior authorization for certain medical services in the network. It will try to answer at least 80% of the requests for prior permission in almost real -time by 2027, says it. (A coalition of great health insurers recently promised to resolve their prior authorization processes under pressure from the federal government.)
The insurer also says that the competition welcomes. “We know that Alabamians have the choice when it comes to choosing their health insurance and we do not take that for granted,” said a spokesperson in the statement. In the commercial and endorsed market – which represents most of its company – Blauw Cross Blue Shield Alabama competes with four other companies that sell individual, family and group plans, says the company, and competes with 68 companies selling medicare plans in Alabama. The success in the state is partly because the policy sells in every county in Alabama, the insurer says, while others don’t.
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Other victims of such a concentrated health insurance market are national hospitals and providers. Small rural hospitals are often independent and are not merged with other systems such as many of their large urban counterparts, so they have it even more difficult to negotiate with one major insurer in the state, says Harold Miller, president and CEO of the Center for Healthcare Quality and Payment Reform. This means that large insurers often refuse to cover procedures or pay lower prices for services.
“I had rural hospitals told that they can’t even get the health plan on the phone,” says Miller.
In the past decade, the Ministry of Justice has stopped some mergersBut has not been very aggressive in stopping consolidation in the health care sector, says Dafny. This can be partly because the courts need a high standard of evidence to block a transaction, and the government might have been worried that it would have lost all the things it has attracted.
A few factors prevent insurers with a monopoly from floating too high, says Benjamin Handel, professor of economics at the University of California, Berkeley who studies healthcare. One is a regulation called minimal loss ratio that essentially requires insurers to issue a certain share of what they earn from premiums of medical care. Another is that an insurer with a monopoly that can make consumers angry, could attract the attention of supervisors, he says.
Of course, not many regulators can do to make a marketplace more competitive. A state could try to encourage more insurers to enter their states with tax benefits or other sweeteners, but it is very difficult to enter a market and immediately offer low rates. The establishment of the health care market in the Affordable Care Act allowed newcomers, says Dafny, but many of them have not survived.
Menger, Alabama’s doctor, says that he and his colleagues – and therefore their patients – are in principle detained. His staff has to spend 10-15 hours a week with the insurer to get previous authorizations that sometimes do not come, even while patients pay higher premiums.
The teenager was eventually approved for the scoliosis operation, but not after the family had gone through a lot of stress and uncertainty. “I think it’s pretty clear that the more competition, the better things are,” says Menger. “This preceding authorization zonzin really hurts patients.”
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