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Competition in Health Care: More Choices, Better Quality, and Lower Costs


Published Nov 4, 2022 • by AHIP

Every American deserves access to affordable, comprehensive, high-quality coverage and care. But health care prices and costs continue to escalate year after year, making coverage and care less accessible for everyone. Now is the time take action and spur robust competition in health care. Health insurance providers are committed to working together with hospitals, health care systems, and other health care leaders to provide all Americans with more health care choices and better quality at lower prices and lower costs.

Competition among health insurance providers and the plans they offer remains robust – offering American families more choices and better value than ever before. But a recent report from the American Medical Association (AMA) alleges otherwise. The AMA’s conclusions and allegations are simply false and wrong. Let’s take a look at the facts.

Focus on MA

More than 29 million seniors and people with disabilities are choosing Medicare Advantage (MA) because it delivers better services, better access to care, and better value. They know that MA delivers lower costs, more choices, and better outcomes.

MA was designed as a public-private partnership to provide choices beyond original Medicare, and to use private market competition to deliver better care at lower costs for seniors and taxpayers.

The facts clearly show: MA works. MA markets have become more competitive over time. Over the last decade:

  1. The average number of MA plans per county increased by 68%.
  2. The number of plans offering the convenience and value of integrated medical and prescription drug coverage (MA-PD) more than doubled.
  3. The vast majority of Americans eligible for Medicare have access to a $0 premium plan with drug coverage.
  4. The number of companies competing in the MA space increased by 15%.

Focus on Commercial Markets

The same is true in the commercial market. Nearly 20 million Americans buy health care coverage on their own or through the Affordable Care Act’s Exchanges. Exchange enrollment is growing thanks to the American Rescue Plan Act’s premium subsidies, which help more than 90% of enrollees purchase affordable coverage that covers essential health benefits and prescription drugs without exclusions for pre-existing conditions or annual or lifetime limits.

The demand for high-quality, low-cost health plans has continued to increase competition in the Exchanges. For 2022, health insurance providers expanded offerings, with more than 200 companies offering coverage through the marketplaces. Consumers have more choices with access to, on average, 6 to 7 qualified health plan (QHP) issuers and more than 100 plans to choose from in every state — more than ever before.

Employer coverage also provides valuable health care coverage for over 180 million Americans each year, and a large majority are able to participate in a health plan and are happy with their coverage. Today, more than 90% of all American workers are employed by a company that offers benefits, and more than 70% of Americans are satisfied with their current employer-provided coverage.

Competition Among Providers

AMA is right about one thing: It’s getting harder to build robust networks to meet the needs of seniors and people with disabilities. And that is directly caused by less and less competition among hospitals, health care systems, and doctors.

Studies show that the lack of competition among providers and anti-competitive contracting practices create perverse incentives for hospitals and health care systems to hike prices without improving value for patients. In addition to no quality improvement, a study in Health Services Research showed hospital consolidation leads to lower patient satisfaction. Members of Congress have highlighted concern with anti-competitive contracting practices and federal agencies have highlighted this as an area for additional comment.

The Bottom Line

Here is the bottom-line truth: MA and the Exchange marketplaces are prime examples of the government and free market working together to deliver lower costs, more choices, and better outcomes for the American people. That’s why America’s health insurance providers stand firm in their commitment to protect and strengthen these markets for the millions of Americans who depend on it.

Americans need and deserve more affordable health care choices than ever before. We invite the AMA to work with us on real solutions to deliver on these important goals.