Health insurance market in Texas may not be competitive

Texas Health Insurance Program

Study highlights lack of competition within the Texas insurance market

The American Medical Association has released a new study that suggests the insurance market in Texas is becoming less competitive. According to the study, Blue Cross Blue Shield of Texas is the dominant insurance provider in all but one of the state’s metropolitan areas. UnitedHealth Group is also a major player in the health insurance market. Together, these two companies account for 63% of the state’s commercial health insurance market, up from 57% in 2010.

Blue Cross dominates many of the markets in Texas and elsewhere in the US

Blue Cross has been increasing its marketshare aggressively over the past few years. The insurer has been offering new products and services to consumers in an effort to establish a stronger foothold in the market ahead of the Affordable Care Act. The federal healthcare reform law had promised to change many things throughout the insurance industry and many insurers made moves to secure their positions in numerous markets before the federal law was enacted.

Economists suggest that high concentration in insurance markets is bad for consumers

Texas Health Insurance ProgramThe economists that wrote the report suggests that high concentration within the nations insurance markets is bad for consumers. They claimed that the 388 markets that they studied were “ripe for the exercise of health insurer market power.” The economists suggest that this would be harmful to consumers and health care providers. With market power lying in the hands of insurers, consumers may be subject to the whims of these companies and have limited options in their markets.

Blue Cross may be thriving because of its range of products and its ability to offer relatively inexpensive coverage to consumers

According to Blue Cross spokeswomen Margaret Jarvis, the insurer experiences a great deal of competition in the markets in which it sells policies. Part of the reason the company is thriving is because of its wide range of products. Health Care Service Corp., the parent company of Blue Cross, notes that other studies have shown that the company’s high concentration and market share are actually good for certain markets.

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