Lost in my inbox during the year-end shuffle was an item serving as a reminder that despite massive changes occurring in the industry, one steady constant remains in Michigan’s health care sector.
In this case, it was the annual report from the American Medical Association that once again identifies Michigan as one of the least competitive states in the country for commercial health insurance.
While Grand Rapids-based Priority Health and other competitors have made inroads over the years, Blue Cross Blue Shield of Michigan as of 2017 continued to hold significant and leading market shares in many areas of the state.
First some numbers.
Statewide, the Blues as of February 2017 held nearly two-thirds of the commercial health insurance market across all product categories, according to the AMA’s 2018 Competition in Health Insurance study released in late December. The report ranked Michigan as the sixth least competitive market in the nation for health insurance, a distinction it’s held for a number of years running.
Blue Cross Blue Shield led the state’s HMO market with a 54 percent share to Priority Health’s 20 percent, and held an even larger lead in the PPO market with a 79 percent share.
The only outliers were for HMO coverage in the Grand Rapids and Lansing areas.
In Grand Rapids, Priority Health held 60 percent of its hometown market, versus 39 percent for Blue Cross Blue Shield’s Blue Care Network. The Sparrow Health-owned Physicians Health Plan had half of the Lansing-area HMO market, compared to Blue Care Network’s 49 percent, although the lead shrank by five percentage points from a year earlier.
“By any standard, we do not have a competitive market in Michigan,” said Dominick Pallone, the executive director of the Michigan Association of Health Plans, which represents HMOs in the state, except Blue Care Network. “What we’re doing is not working from a regulatory standpoint.”
Pallone thinks lawmakers in Lansing should take a look at how to make the state commercial health insurance market more competitive, but he also said health plans need to do more to urge employers to shop around for coverage. Employers now with Blue Cross Blue Shield should demand claims data so they can seek bids from other carriers, Pallone said.
The nonprofit Blue Cross Blue Shield held by far the largest share of Michigan’s small group market in 2018. According to the Michigan Department of Insurance and Financial Services, the Blues accounted for 70 percent of the more than 414,000 people covered by small group policies. Priority Health was second at 11.2 percent.
Priority Health President and CEO Joan Budden views the AMA data as “very correct.” What competition that does exist in the state is only “in pockets,” she said.
Budden said that Priority Health — which over the last several years has expanded statewide — was “beginning to make traction” in some areas of the state, and has done particularly well in the Medicare and Medicaid markets.
As expected, Blue Cross Blue Shield of Michigan offers a decidedly different take on the AMA’s annual market share report.
Andy Hetzel, vice president of corporate communications at Blue Cross Blue Shield, argues the report does not paint an accurate picture of the Michigan market. Some MSAs across the state are “very competitive,” particularly for individual coverage and small group plans, Hetzel said.
However, Pallone at the MAHP notes the individual market only affects about 6 percent of the people in Michigan.
The AMA report shows Priority Health holds the largest market share, 35 percent, for individual health plans sold on the public exchange. Blue Cross Blue Shield was second at 25 percent.
Blue Cross Blue Shield also faces “very strong” and “very aggressive” HMO competitors from the likes of Priority Health and Detroit-based Health Alliance Plan, both of which started as regional players and have expanded statewide, Hetzel said.
“Michigan is a very competitive insurance market,” said Hetzel, who calls the annual market share report “a regurgitation of the same old litany of complaints.”
“The assumption by the AMA that Michigan is anti-competitive is not really connected to the reality that we face here in Michigan,” he said. “Yes, we have a Blue Cross plan that has 80 years of heritage in serving every county and community in the state of Michigan, but that does not mean that the market in uncompetitive.”