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Illinois Insurers Gain Clout

A few giant companies dominate the market

By Bruce Japsen

The clout of insurance companies is growing rapidly in Illinois, threatening competition and potentially squeezing patient choice of physicians, according to a new report issued by the American Medical Association (AMA). And Illinois is not alone. Across the country, mergers among health plans has put the control of who provides commercial insurance into the hands of fewer insurance executives. In addition, a single health insurance company has at least a 50% share of the market in 41% of metropolitan areas across the country, according to the AMA’s report, “Competition in Health Insurance: A Comprehensive Study of U.S. Markets.” The study is based on 2012 data from commercial insurance enrollment in both fully insured plans and self-insured plans, the AMA said.

Physician groups locally and nationally say the report is evidence that consumer choice of doctors is threatened and could be contributing to higher health care costs for patients. The AMA said the report should raise antitrust concerns from legislators.

An Analysis of Insurance Company Control in Illinois

In Illinois, two insurance companies—Blue Cross and Blue Shield of Illinois and UnitedHealth Group—controlled 75% of the commercial insurance market, which is an increase from the AMA’s analysis two years earlier when the two plans controlled 67% of the state’s market.

In this year’s analysis of the 2012 data, Blue Cross and Blue Shield of Illinois, a subsidiary of Health Care Service Corp., controls 61% of the commercial insurance market while UnitedHealth Group’s United Healthcare of Illinois subsidiary controls 14% of the market. “In many Illinois cities, patients and the employers who provide coverage to workers are at a disadvantage due to limited health insurance options,” said William McDade, MD, a University of Chicago anesthesiologist and president of the Illinois State Medical Society. “When faced with limited competition, insurers have the opportunity to wield too much control, dictating premium expense and other aspects of patient care.”

In 8 of the 11 largest Illinois metropolitan areas, including the Chicago area, Blue Cross and Blue Shield of Illinois controls 50% or more of the market. The metropolitan area that includes Chicago, Naperville and Joliet was the least competitive market, with Blue Cross and Blue Shield of Illinois holding 68% of the insurance market.

From 2011 to 2012, Illinois experienced the “biggest drop” in competition, according to the AMA. The AMA also stated that Illinois is among 10 states that are considered the least competitive when it comes to commercial insurance.

The Increasing Clout of Insurers Troubles Physicians

This amount of control has medical professionals worried. “The dominant market power of big health insurers increases the risk of anti-competitive behavior that harms patients and physicians, and presents a significant barrier to the market success of smaller insurance rivals,” said AMA president Robert Wah, MD.

The increasing clout of a few insurance companies is something for physicians to take note of, particularly as more Americans gain commercial insurance coverage under the Affordable Care Act and private health insurers take on a greater role managing health benefits for those covered by the Medicaid program. Health insurance companies and employers that hire them to administer self-funded plans hold significant power over a patient’s choice of medical care providers. Given that benefits provided under the health law are largely administered by commercial plans, the insurance industry’s clout is only expected to increase in the future.

The Rise of Narrow Networks: Limiting Patient Choice?

To make plans operating on government-run exchanges more affordable, Blue Cross and Blue Shield of Illinois, UnitedHealth Group and others are offering more plans with narrow networks, which offer more limited choices of physicians and hospitals. Insurance companies say narrow networks allow them to more closely monitor quality providers. Doctors and hospitals who meet quality measures are more likely to be part of the narrow network, insurers say.

Physicians, however, say narrow networks are limiting patient choice and threatening access. “Health insurance companies have an obligation to build sufficient physician networks to ensure care delivery to their customers,” said Dr. McDade. “We are concerned that many insurers aren’t meeting this obligation. Narrow networks may prohibit patients from seeing preferred physicians or require traveling greater distance when seeking care.”

For its part, Blue Cross and Blue Shield of Illinois, in response to the AMA market share study, said its large number of health plan members, which have ballooned to more than 8 million across the state, allows it to provide more choices and products that keep cost increases down. “Blue Cross and Blue Shield of Illinois supports a competitive marketplace for health insurance,” a Blue Cross and Blue Shield of Illinois representative said in a statement to Chicago Medicine.

“Despite the strong local and national competition that we face, our members consistently choose Blue Cross and Blue Shield because of our product choices, the extensive provider networks we offer, along with our excellent customer service and commitment to helping them manage their health care choices and decisions,” a Blue Cross and Blue Shield of Illinois representative said. “Recent studies suggest our strong membership actually helps bring down the cost of medical care in the communities we serve, in contrast to the consolidation of providers in a market which is found to increase costs for consumers.”

Bruce Japsen is an independent health care journalist who writes for Forbes and contributes analysis to WBBM Newsradio and WTTW television in Chicago and Fox News Channel’s Forbes on Fox. He can be reached at

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