Is North Dakota’s Health Insurance Market Monopolistic?

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In a report clearly timed to help make the case for the Obamacare health insurance exchanges (which, I’d remind you readers, would do little to promote competitiveness in the insurance markets), the American Medical Association is claiming that North Dakota’s health insurance market is nearly monopolistic.

That’s the term used by Forum Communications reporter Patrick Springer reporting that Blue Cross Blue Shield of North Dakota owns most of the health insurance market in the state.

FARGO — North Dakota ranks among the states with near-monopolistic health insurance markets, a study by the American Medical Association shows.

Concentration of health insurance among a handful of firms sets up conditions that lead to higher premium costs and less generous benefits, the study said.

In North Dakota, the private health insurance market has long been dominated by Blue Cross Blue Shield of North Dakota.

Blue Cross Blue Shield dominates the preferred provider segment of the market, in which customers select a health system and have to pay more out of pocket if they go outside that network for care.

The North Dakota Blues have 54 percent of the preferred provider segment, according to the American Medical Association study.

The Blues also have 81 percent of what’s called the point of service market, a hybrid between the preferred provider and more restrictive health maintenance organization, or HMO, which requires a doctor’s authorization for any treatments.

Figures kept by the North Dakota Insurance Department indicate Blue Cross Blue Shield has an even more dominant market position, with about 85 percent of premiums in the standard private health insurance market.

So is the health insurance market in North Dakota a monopoly? First, let’s define what a monopoly is. It is a situation where a single entity owns the entirety of a market, keeping competitors out, for the purpose of inflating prices.

Are those things true in North Dakota? Well, the price part isn’t. North Dakota health insurance prices are below national average even the company ranks in the top tiers for benefits paid:

He said the average 2011 employee contribution for single coverage in North Dakota provided through an employer was $987 in North Dakota, compared to a U.S. average of $1,090, according to figures from Kaiser Family Foundation.

Also, Wagner said, Blue Cross Blue Shield of North Dakota health plans typically are ranked in the top 10 percent to 25 percent in terms of benefit offerings. “The level of benefits is very high,” he said.

Prices don’t seem to be inflated here (at least not any more than they are in every other part of the country). So how about entry into North Dakota’s insurance marketplace? Unfortunately, North Dakota (like a lot of other states) controls rates and other aspects of the health insurance market through the State Insurance Department. That sort of restrictive regulation always tamps down competition. Price controls and other red tape market it harder for companies to compete with one another in the margins.

So yes, North Dakota has an effective health insurance market, but that’s not the fault of Blue Cross Blue Shield or anyone else in the private sector. That’s the result of restrictive state policies which actively work against competition. Policies that are just going to get worse under Obamacare despite the insurance exchanges which are the federal government’s attempt to manufacture a market that could exist if only we’d embrace deregulation of the insurance industry.

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Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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