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GAO-09-864R 1 (2009-07-31)

handle is hein.gao/gaobaanpb0001 and id is 1 raw text is: AGA ~G A 0 Acountabiity I Integrity * Reliability United States Government Accountability Office Washington, DC 20548 July 31, 2009 The Honorable Herb Kohl Chairman Subcommittee on Antitrust, Competition Policy and Consumer Rights Committee on the Judiciary United States Senate Subject: Private Health Insurance: Research on Competition in the Insurance Industry Dear Mr. Chairman: Health care providers and members of Congress have raised concerns that consolidation in the private health insurance industry may be resulting in less competitive markets and contributing to rising health insurance rates paid by consumers and employers. However, measuring the extent of changes in market competition over time or the effects of changes is challenging. In particular, reliable, longitudinal data to measure concentration, that is, the number of competitors and their relative market share, are only available on health maintenance organizations (HMO) but not on preferred provider organizations (PPO) or other insurance products that may comprise the market.' Further, data on health insurers are not available at all geographic levels. Despite these challenges, researchers have used the data available to study competition in health insurance markets, typically using one of two measures of competition: (1) HMO market concentration or (2) the number of HMOs in a market.2 Researchers acknowledge that market concentration and the number of competitors are not perfect measures of competition in private health insurance markets and that there 'Health maintenance organizations (HMO) and preferred provider organizations (PPO) are insurance products that generally rely on providers to control service utilization and they provide financial incentives to encourage patients to use network providers who have agreed to accept fee discounts. Under an HMO, patients may be restricted to using only network providers, and they typically require that all specialty care be coordinated through a primary care physician. PPO enrollees face lower cost- sharing requirements when they receive care from network providers, but may choose non-network providers at a higher cost and do not typically need referrals to see a specialist. Other insurance products include, for example, point of service plans, which allow members to decide at the time medical services are needed whether they will seek care from a provider within the plan's network or seek care outside of the network. 2Greater concentration rates or fewer insurers may indicate a less competitive market, and lower concentration rates or a greater number of insurers may indicate a more competitive market. GAO-09-864R Competition in Health Insurance Markets

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