Crain’s Chicago Business
October 25, 2010
Blue Cross keeps grip on Chicago market
By Micah Maidenberg
A study by the American Medical Assn. underscores a widely recognized reality about the health-insurance market in the Chicago area: It's dominated by Blue Cross & Blue Shield of Illinois.
Health Care Service Corp., which does business as Blue Cross here, holds a commanding 63% share of the local market for medical care through health-maintenance and preferred-provider organizations, according to the AMA's annual report on competition in health insurance. The report, released Tuesday, echoes the findings of earlier AMA reports.
Statewide, the firm's market share for these two insurance options is 55%, the AMA found.
Blue Cross attracts big employers and can win public contracts with its well-built network of providers. But the firm's dominance here doesn't necessarily translate into lower costs for consumers.
Monopoly power can hurt doctors as well as consumers, the study noted, repeating a long-held AMA contention.
"Insurer consolidation leads to the exercise of … power vis-a-vis physicians — i.e., lower physician earnings and employment," the report says.
In a statement, Blue Cross says it "supports a competitive marketplace for health insurance," noting that more than 30 established health insurers compete in Illinois.
The firm says it holds such a commanding position in the market because more than 92% of its customers renew their policies with the company, citing the firm's "competitive pricing, extensive provider networks" and other factors.
The AMA study does not single out Chicago-based Health Care Service, finding that a lack of competition in local markets for health insurance is widespread nationwide.
The report relies on 2009 data from Nashville-based research firm HealthLeaders-InterStudy. In last year's report, the AMA found that Health Care Service had a 79% share of the Chicago market for HMO and PPO medical care, based on 2008 data.
This year's report includes information on self-insured HMOs, which was not included in last year's report, a source familiar with the report says. As result, year-to-year comparisons are not possible.
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