The rich insurers may not necessarily be getting richer, but the big ones doing business in certain states are definitely munching more market share. Even the efforts of the Obama administration to diversify those providing health insurance haven't served to slow down the growth of carriers that dominate state business.
Call it "the rule of three." Evidence of this phenomenon in state health insurance sales comes from a Government Accountability Office report that examined which companies are dominating sales in a state-by-state comparison. The researchers found that, in 37 states, three companies tend to dominate. And, in many of those states, a single company has the lion's share of individual, small and large group business.
Recommended For You
The two major players nationwide are Blue Cross Blue Shield and Wellpoint. Both have gained market share with the advent of the Patient Protection and Affordable Care Act, and they appear poised to grow even larger.
The GAO found that dominance was most pronounced in 37 states, where fewer insurers were chasing business in the three categories. In the other states, with more players active in the market, less evidence of dominance by any one carrier surfaced.
Summarizing its findings, the GAO said: "While several insurers participated in each state's individual, small group, and large group health insurance markets in 2013, enrollment was concentrated among the three largest insurers in most states. On average in each state, there were several insurers participating, with about twice as many insurers participating in the individual market (24) as the small group (12) and large group (11) markets. However, in each of the three market segments, the three largest insurers had at least 80 percent of the total enrollment in at least 37 states.
"Further, in more than half of these states, a single insurer had more than half of the total enrollees and in 5 of these states there was at least one market segment in which the largest insurer had at least 90 percent of all the enrollees. For example, in Alabama's small group market, the largest insurer — Blue Cross and Blue Shield of Alabama — had 97 percent of the total enrollment in the state."
Blue Cross Blue Shield's prominence has been building for several years, the report said.
"We also found that a Blue Cross and Blue Shield insurer was the largest insurer in most states in each of the market segments from 2010 through 2013. Specifically, a Blue Cross and Blue Shield insurer was consistently the largest insurer in 44 states in the individual market, 38 states in the small group market, and 40 states in the large group market across the time period."
The study culled out states where the top three carriers had at least 80 percent of the market. The data revealed that the rule-of-three states showed the largest percent increase in the individual market; concentration actually dropped in the cases of group plan sales.
But overall, concentration of business is escalating. Market share held by the three largest insurance companies averaged 86 percent of customers in the individual market last year, up from 83 percent three years earlier.
Experts warned not to read too much into the slight increase, since PPACA has barely been implemented and it will take years to de-monopolize certain state marketplaces that have long been dominated by a few large players.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
