When insurance broker Russ Blakely tries to shop for cheaper health care coverage for his clients, he doesn't have many choices.
"We really have only three health insurance options in Chattanooga today," he said. "I'd love to see three or four more competitive health insurers in the market like we used to have because I think that would give us better prices and more options."
Nearly 70 percent of the employer-provided health care in the Chattanooga area is controlled by BlueCross BlueShield of Tennessee, Cigna and United Healthcare, according to Healthleaders Inter-Study, an industry study group.
Those insurers insist that the insurance market remains more competitive than the hospital market that delivers health care and, if their costs get too high, others will enter the market.
"There are more than 1,300 health insurance providers in the United States, and we believe the consumer is best served by the private market," said John Sorrow, head of Cigna's Chattanooga operations.
But many health reform advocates claim the insurance industry is too concentrated and they want the government to offer consumers another choice. Offering that choice is the so-called "public option" in President Barack Obama's health care reform plan.
"Making the insurance market more competitive is a necessary step to controlling costs, and I think the public option is one way to ensure there are more choices at better prices for the consumer," said Timothy Sweeney Sr., a health care analyst for the Georgia Budget and Policy Institute, an Atlanta advocacy group which backs President Obama's health care reform plans.
Advocates of new government insurance options, including President Obama, contend a public choice would provide needed competition to force price reductions from private health plans, which have consolidated over the past decade.
But insurance companies insist there is adequate competition already and government-aided plans could crowd out private plans by offering insurance too cheaply for private companies to match.
market share muscle
Across the state, the Chattanooga-based BlueCross BlueShield of Tennessee insures nearly half of all Tennesseans with both commercial coverage and administration of much of the state's Medicaid program. BlueCross' share in the commercial market ranges from 33 percent in Memphis up to 56 percent in Jackson, according to a study by the American Medical Association.
The BlueCross plan in Georgia, owned by Wellpoint, controls only 27 percent of Georgia's commercial market. But the three biggest insurers still collectively control nearly two-thirds of Georgia's commercial health insurance market.
Using standard industry rules developed by the Federal Trade Commission, the AMA study found that 94 percent of America's metro areas are "highly concentrated" with only a few health insurers. The doctors group contends that consolidation of health insurers has pushed up prices for consumers and cut payments to health care providers.
"The provider-owned plans we saw in the past have either been sold or gone away and there has been a tremendous amount of consolidation in the industry," said Jane Dubose, director of health plan analysis for Healthleaders in Nashville. "There are markets where there is so much concentration that you would have to believe that there is less price competition and less innovation with products."
Ms. Dubose said government health plans usually have not done much better in controlling costs and, when they do, they usually pay doctors and hospitals far less than private insurers are able to pay.
"The insurance market is certainly competitive -- far more than what we deal with from providers with only two or three hospital groups in most Tennessee markets," said Dr. Steve Coulter, executive vice president of BlueCross of Tennessee. "We support meaningful health care reform. But we don't think it is good policy to create public plans that could crowd out private insurers and raise the costs to taxpayers."
But expanding government's role in providing health care coverage won't necessarily hurt BlueCross or other insurers that help administer many government plans.
BlueCross administers CoverTN, CoverKids and AccessTN -- three state-sponsored programs created to help offer subsidized or discounted health plans for low-income and uninsurable Tennesseans. BlueCross also is the largest managed care organization in Tennessee's Medicaid program known as TennCare.
As a result, while BlueCross lost nearly 30,000 commercial customers in the past year, the insurer is covering nearly 60,000 more Tennesseans through its government-paid programs, Dr. Coulter said.
Tony Garr, executive director for the Tennessee Health Care Campaign and a supporter of President Obama's health care reform plan, said the biggest share of the 973,000 uninsured Tennesseans are low-income families. Expanding TennCare and Medicare eligibility, in addition to creating new public option health plans, could significantly reduce the number of those without insurance.
"And BlueCross will do just fine," he said.