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Today many Americans have few choices when it comes to health insurance. This is because many insurance markets are dominated by only a handful of firms, even though there are over 1,000 private health insurance carriers in the United States. This concentration limits employers’ and families’ health insurance options as well as the care they receive.
In many states small insurers compete against one another in the individual market to insure only low-risk, healthy individuals. They refuse to insure Americans with pre-existing conditions such as high blood pressure, asthma, cancer, or diabetes and those who have ever taken certain prescription drugs—and they create barriers to needed care for those who are insured.
The map shows that in many states insurance markets are dominated by only one or two insurance carriers. In at least 21 states, one carrier controls more than half the market. More than half of the market is controlled by two carriers in at least 39 states. In 2007, a survey conducted by the American Medical Association found that in more than 95 percent of insurance markets, a single commercial carrier controlled at least 30 percent of the insurance market.
The result of this market concentration is that health insurance interests come before Americans’ health care needs. Where markets are dominated by only a few firms, health insurers revenues are growing faster than health inflation as insurers maximize rates they charge employers and families and create barriers to care. Employers are then unable to afford meaningful health insurance options for their employees or, in the case of small businesses, are unable to offer their employees insurance at all, while most Americans seeking health insurance in the individual market never purchase coverage.
Real health care reform, which includes the creation of a new public health insurance plan, will encourage the type of competition that benefits patients, employers, and health care providers. As a new competitor in consolidated insurance markets, the public plan will force private insurers to compete on price and value and require them to increase accountability and efficiency. The ultimate result of vigorous competition will be to give American families more and better choices.
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 American Medical Association, “2007 Update: Competition in Health Insurance, A Comprehensive Study of US Markets: 2007 Update,” available at http://www.ama-assn.org/ama1/pub/upload/mm/368/compstudy_52006.pdf.
 Peter Harbage and Karen Davenport, “Competitive Health Care: A Public Health Insurance Plan that Delivers Market Discipline” (Washington, D.C.: Center for American Progress Action Fund, March 2009), available at http://www.americanprogressaction.org/issues/2009/03/pdf/competitive_health.pdf