The Market Structure of the Health Insurance Industry
"Evidence suggests that health insurance markets are highly concentrated in many local areas.
Many large firms that offer health insurance benefits to their employees have self-insured, which
may put some competitive pressure on insurers, although this is unlikely to improve market
conditions for other consumers. The exercise of market power by firms in concentrated markets
generally leads to higher prices and reduced output—high premiums and limited access to health
insurance—combined with high profits. Many other characteristics of the health insurance
markets, however, also contribute to rising costs and limited access to affordable health insurance.Rising health care costs, in particular, play a key role in rising health insurance costs.

Health costs appear to have increased over time in large part because of complex interactions
among health insurance, health care providers, employers, pharmaceutical manufacturers, tax
policy, and the medical technology industry. Reducing the growth trajectory of health care costs
may require policies that affect these interactions. Policies focused only on health insurance
sector reform may yield some results, but are unlikely to solve larger cost growth and limited
access problems. This report will be updated as events warrant..."