It's debatable if the fiduciary standard is 'higher' than suitability. But the better question might be, who's holding the bar?
Dec. 03--Competition, when it comes to group health insurance, remains pretty much Blue Cross Blue Shield of N.C. -- and the rest of the pack in the Triad and statewide.
Blue Cross holds a 48 percent market share in the state for all commercial health products, according to a 2012 study by the American Medical Association on health insurance competition. UnitedHealthcare is second at 18 percent.
The products included health maintenance organizations (MCO), preferred provider organizations (PPO) and point of service plans (POS).
The AMA said it determined, as it has in the past, "a significant absence of health insurer competition" in 70 percent of the 385 metropolitan areas it surveyed nationwide.
"The new data demonstrate that most areas of the country have a single health insurer with an anti-competitive share of the HMO, PPO or POS market," said Dr. Jeremy Lazarus, the association's president.
The study said that health insurers' monopoly power in markets produces increased premiums, watered-down benefits and insurers' growing profitability. The study these "as evidence that highly concentrated markets harm patients and physicians."
Competitors have been making some market-share gains in North Carolina, considering Blue Cross and UnitedHealthcare together controlled 81 percent in 2009, compared with 66 percent in the latest study.
Blue Cross' dominance is significantly stronger for strictly PPO products, where it holds a 76 percent market share statewide, with Aetna a distant second at 14 percent.
Blue Cross appears to be facing more competition locally.
The study determined Blue Cross had 44 percent of the overall market share in the Winston-Salem metropolitan statistical area of Davie, Forsyth, Stokes and Yadkin counties, down from 53 percent in 2009. UnitedHealthcare had 21 percent, down from 39 percent.
However, for strictly PPO products, Blue Cross' market share in the Winston-Salem MSA is 70 percent, with Aetna second at 23 percent.
"This annual study shows that North Carolina employers and consumers are voting with their wallets," Blue Cross spokesman Lew Borman said.
"(Blue Cross) listens carefully to our customers, and we are dedicated to bringing them the products, service and tools they want."
The state Insurance Department said about 100 licensed carriers sell group-insurance coverage and about 20 licensed carriers sell individual coverage.
Among the study's findings: 67 percent of the metropolitan areas had a health insurer with an HMO market share of at least 50 percent; and 68 percent of the areas had a health insurer with a PPO and a POS market share of at least 50 percent.
North Carolina ranked eighth among the top 10 for least competitive PPO markets, but did not rank among the top 10 states for least competitive HMO markets.
Blue Cross Blue Shield of N.C. reported in March its profits rose for a second year even as medical costs rose and the sour economy restricted membership growth.
The insurer reported a $177.1 million profit, up 6 percent compared with fiscal 2010. Its 2011 profit margin of 3.1 percent on revenues of $5.5 billion was consistent with 2010 and below the company's target range of 3.5 percent to 4.5 percent.
Blue Cross had 3.6 million customers in 2011, down slightly from 2010.
Although rates are regulated by the state insurance department, the Raleigh News & Observer reported that insurers can adjust rates for specific customers based on factors that include medical history, age, gender and geography.
The health insurance industry "is leading us toward a few, super-large underwriters who control the market," said Tony Plath, a finance professor at UNC Charlotte. "That includes mandating specific covered treatment options, as well as pricing."
The primary reason there is a lack of competition is that insurers are regulated and licensed in each state's insurance department. That's why Blue Cross of N.C. is a different entity from the Blue Cross organizations in other states.
Some states require more mandated benefits and coverage, which is why premium costs tend to be higher and why consumers aren't allowed to buy insurance across state lines.
"Insurers, like all businesses, want to operate where they have a favorable business climate," said David Wood, a professor of risk management and insurance at Appalachian State University.
"I would like for someone to explain why there is a lack of insurers interested in entering the health care insurance arena in North Carolina and elsewhere in the United States."
(c)2012 Winston-Salem Journal (Winston Salem, N.C.)
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