Insurance Firm Consolidation: Whither Competition?

The health insurance industry in America is increasingly devoid of competition according to a new report from the GAO. In a majority of metropolitan areas, a single insurance provider holds a majority market share. In 9 states, Blue Cross and Blue Shield holds a majority market share. And the problem isn't expected to go away any time soon.
Paul B. Ginsburg, president of the Center for Studying Health System Change, a nonpartisan research institute, said: "There is a strong trend toward more concentration in health insurance in local markets. Being large seems to be more important than ever. Small plans are losing market share to large plans."
In the face of these problems, the federal government is stepping in, ostensibly with a solution. The solution is to let small businesses pool together and to gut state regulations of health insurance plans. The latter move will make it more likely that insurance plans don't cover important medical needs like cancer screenings and it may omit entire realms of medicine, including diabetes or mental health treatment, from plans being offered. The federal bill is no solution, which is why insurance commissioners and attorneys general are nearly unanimous in their opposition.