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Study: Iowa lacks PPO competition [Telegraph-Herald (Dubuque, IA)]

By EILEEN MOZINSKI SCHMIDT
Proquest LLC

Wellmark Blue Cross and Blue Shield has "near-monopolies" of the preferred provider organization markets in both the state of Iowa and Dubuque, to the detriment of area patients and physicians, according to a recent national report.

But while the Iowa-based health insurance provider acknowledges that its client base is by far the largest in the state, a company leader says that customers are actually benefiting from the makeup of the market.

The national report, "Competition in Health Insurance: A Comprehensive Study of U.S. Markets," was released by the American Medical Association late last year.

The report, which includes data from 385 metro areas and all 50 states, was an investigation into competition levels for insurers providing various types of health care plans; point-of-service plans, health maintenance organizations and preferred provider organizations.

The findings were that a lack of competition is the norm across the country.

"The new data demonstrate that most areas of the country have a single health insurer with an anti-competitive share of the ... market," said Jeremy Lazarus, president of the AMA, in a statement.

The result is "increased premiums, watered-down benefits and insurers' growing profitability as evidence that highly concentrated markets harm patients and physicians," the report said.

Iowa has one of the least competitive marketplaces for preferred provider organizations, and the Dubuque market is also "anti- competitive," according to the report.

In the study, Iowa ranked seventh in the nation for the anti- competitive conditions, with Wellmark making up 76 percent of the state's preferred provider organization market.

Wellmark accounts for 78 percent or more of that market in Dubuque and several other Iowa cities, including Cedar Rapids, Des Moines, Iowa City and Waterloo/Cedar Falls.

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Elsewhere in the tri-states, Wisconsin was fifth in the nation for anti-competitive markets for point-of-service plans, according to the AMA report.

Others in the tri-state area medical and insurance industries were reticent to discuss Wellmark's local market dominance.

A spokeswoman for Medical Associates Clinic, the tri-state area's largest health care clinic, said no one with the organization was available to comment on the AMA study.

At Dubuque-based insurance broker Cottingham & Butler, President David Becker declined to comment on the report due to the complexity of the issue.

But a Wellmark leader said a large market share does not translate to adverse conditions for consumers.

The Iowa Insurance Division tapped an Indianapolis-based law firm to examine both Wellmark Inc. and Wellmark Health Plan of Iowa in 2011.

That report found that Wellmark is "a good corporate citizen and that consumers fare very well with Wellmark and have benefited from Wellmark's market share," said David Brown, executive vice president and chief financial officer of Wellmark, in a statement.

He noted that the company has a long-term priority of creating a sustainable health care system.

The company, which is owned by its policyholders, has a small operating margin with a target profit margin of 0 to 3 percent, according to Brown's statement.

He said premium rates are regulated by the insurance division and are "competitive" with those charged by other insurers in Iowa.

As debate circulated in recent weeks over Wellmark's proposal for a 12 percent to 13 percent premium increase for individual policyholders - which was approved by Iowa insurance commissioner Susan Voss on Wednesday, the company has come under fire for how much money it pays Chairman John Forsyth. He received $3.1 million in 2011, more than double the $1.3 million he was paid in 2003.

The AMA study authors acknowledged that consolidation of insurers can have both beneficial and harmful effects on consumers.

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"However, only the latter has been observed," the study said, adding that the consolidations have resulted in "monopoly power" to raise premiums above competitive levels.

The study's authors called for "prompt" examinations by state and federal antitrust authorities, along with investigations into the impact of previous consolidations on premium levels.

The Associated Press contributed to this story

Copyright:(c) 2013 ProQuest Information and Learning Company; All Rights Reserved.
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