Private Health Insurance: Number and Market Share of Carriers in 
the Small Group Health Insurance Market (25-MAR-02, GAO-02-536R).
                                                                 
GAO reviewed the small group health insurance market to identify 
the number of licensed carriers, the largest carriers, and their 
market share in each state. GAO found that (1) the median number 
of licensed carriers in the small group market per state was 28, 
(2) the median market share of the largest carrier was about 33  
percent, (3) the five largest carriers, when combined,		 
represented three-quarters or more of the market in 19 of the 34 
states reviewed and they represented more than 90 percent in	 
seven states, (4) 25 of 37 states identified Blue Cross and Blue 
Shield (BCBS) carrier as the largest carrier offering health	 
insurance in the small group market, and (5) the median market	 
share of all the BCBS carriers in the 34 states supplying	 
information was about 34 percent.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-536R					        
    ACCNO:   A02938						        
  TITLE:     Private Health Insurance: Number and Market Share of     
Carriers in the Small Group Health Insurance Market		 
     DATE:   03/25/2002 
  SUBJECT:   Employee medical benefits				 
	     Health insurance cost control			 
	     Small business					 
	     Health insurance					 


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GAO-02-536R
     
GAO- 02- 536R State Small Group Health Insurance Markets United States
General Accounting Office Washington, DC 20548

March 25, 2002 The Honorable Christopher ?Kit? Bond Ranking Minority Member
Committee on Small Business and Entrepreneurship United States Senate

Subject: Private Health Insurance: Number and Market Share of Carriers in
the Small Group Health Insurance Market Dear Senator Bond:

As a follow- up to our recent report to you on the small group health
insurance market, 1 you requested additional information on each state and
the District of Columbia. Specifically, you asked us to identify- for each
state- the number of carriers 2 licensed in the small group market, the
largest carriers, and their market share.

To obtain this information, we sent an electronic survey to the office
responsible for regulating insurance and/ or health plans in all 50 states
and the District of Columbia (hereafter referred to as a state). We followed
up with nonresponding states by e- mail and by telephone and received
responses from 48 states. However, not all 48 states had the information
needed to answer all of the questions. For example, 37 states reported the
largest carrier and 34 states provided market share data. Also, the
responding states varied in how they defined the size of a small group.
Most- 33- defined a small group as 2 to 50 employees, 11 defined a small
group as 1 to 50 employees, and 4 had some other definition. 3 We did not
verify the information provided by the states. We performed our work in
February and March 2002 in accordance with generally accepted government
auditing standards. 1 U. S. General Accounting Office, Private Health
Insurance: Small Employers Continue to Face

Challenges in Providing Coverage, GAO- 02- 8 (Washington, D. C.: Oct. 31,
2001). 2 A carrier is generally an entity (either an insurer or managed
health care plan) that bears the risk for and administers a range of health
benefit offerings.

3 Arkansas defined a small group as 1 to 25 employees, Missouri as 3 to 25
employees, and New Hampshire as 1 to 100 employees. Hawaii does not
separately define small groups for the purpose of health insurance.

GAO- 02- 536R State Small Group Health Insurance Markets Page 2

In summary:

The median number of licensed carriers in the small group market per state
was 28, with a range from 4 in Hawaii to 77 in Indiana.

The median market share of the largest carrier was about 33 percent, with a
range from about 14 percent in Texas to about 89 percent in North Dakota.

The five largest carriers, when combined, represented three- quarters or
more of the market in 19 of the 34 states supplying information, and they
represented more than 90 percent in 7 of these states.

Twenty- five of 37 states supplying information identified a Blue Cross and
Blue Shield (BCBS) carrier as the largest carrier offering health insurance
in the small group market, and in all but one of the remaining 12 states, a
BCBS carrier was among the five largest.

The median market share of all the BCBS carriers in the 34 states supplying
information was about 34 percent, with a range from about 3 percent in
Vermont to about 89 percent in North Dakota; in 9 of these states BCBS
carriers combined for half or more of the market.

The enclosure summarizes by state the number of licensed carriers, the
largest carrier and its market share, and the market share of the five
largest carriers in the small group market. In addition, the enclosure shows
the rank of the largest BCBS carrier and the combined market share of all
BCBS carriers. As agreed with your office, unless you publicly announce its
contents earlier, we will

not distribute this letter until 30 days after its date. Then we will make
copies available upon request. This letter will also be available on GAO?s
home page at

http:// www. gao. gov. Please call me at (202) 512- 7118 or John Dicken at
(202) 512- 7043 if you have any questions. Major contributors to this
correspondence include N. Rotimi Adebonojo and Joseph Petko.

Sincerely yours, Kathryn G. Allen Director, Health Care- Medicaid

and Private Health Insurance Issues Enclosure

Enclosure Enclosure Page 3 GAO- 02- 536R State Small Group Health Insurance
Markets Table 1: Number of Carriers, Largest Carrier, and Market Share Data
for Small Group Health Insurance Carriers, by State State

Number of licensed

carriers Largest carrier Market share of

largest carrier (percent)

Market share of five largest

carriers (percent)

Rank of largest

BCBS carrier Market

share of all BCBS carrier( s) (percent)

Alabama 10 BCBS of AL 87.4 93.8 1 87.4 Alaska 9 Premera Blue Cross 51.9 81.5
1 51.9 Arizona

53 United Healthcare of

AZ, Inc. 24.5 66.9 2 20.8 California a 14 b Blue Cross of California b NA NA
1 b NA Colorado 44 Employers Health 15.6 57.9 9 5.3 Connecticut c 47

Anthem BCBS of CT, Inc. 33.1 97.9 1 33.1 Delaware a 17 NA NA NA NA NA
District of Columbia a 9 NA NA NA NA NA Florida

26 United Healthcare of

FL, Inc. 21.6 64.6 2 26.9 Georgia d BCBS Health Care Plan

of GA d 19.7 d 47.3 d 1 d 28.3 d Hawaii a 4 NA NA NA NA NA Idaho a 15
Regence Blue Shield 44.4 92.7 1 81.9 Illinois 36 NA NA NA NA NA Indiana

77 Anthem Insurance

Company 18.5 51.1 1 18.5 Iowa 54 Wellmark, Inc. e 46.5 e 76.7 e 1 e 52.8 e
Kansas a 35 BCBS of KS, Inc. f NA NA 1 f NA

Kentucky 10 Anthem 43.7 89.2 1 43.7 Maine 13 Aetna US Healthcare 45.6 90.9 2
39.1 Maryland 18 CareFirst, Inc. 48.2 95.3 1 48.2 Massachusetts 24 HMO Blue
30.6 79.0 1 37.1 Michigan g 64 BCBS of MI 63.2 84.8 1 79.1 Minnesota 20
BCBSM, Inc. h 42.0 h 87.7 h 1 h 49.6 h Missouri a 47

Healthy Alliance Life Ins. Company 18.9 51.8 1 32.2 Montana i BCBS of MT
40.8 78.0 1 40.8 Nebraska a 30 NA NA NA NA NA New Hampshire a 9 Healthsource
NH 40.0 75.2 j 2 35.2 New Jersey k 22 Horizon BCBS of NJ 30.1 84.4 1 46.0
New York 34 l Oxford m 18.5 m 57.2 m 2 m 26.5 m North Carolina 37 BCBS of NC
26.6 67.5 1 26.6

North Dakota 12 Noridian/ BCBS 88.8 95.7 1 88.8 Ohio c 70 Anthem BCBS 32.6
66.4 1 32.6 Oklahoma a 64

Group Health Services of OK f NA NA 1 f NA Oregon a 13

Lifewise, A Premera Health Plan 22.7 73.7 3 23.1 South Carolina 54 PHP 31.4
72.8 2 25.4 South Dakota a 15 Wellmark BCBS of SD 28.6 60.3 1 28.6 Tennessee
59 BCBS of TN n 54.7 n 81.1 n 1 n 61.4 n

Enclosure Enclosure GAO- 02- 536R State Small Group Health Insurance Markets
Page 4

State Number of

licensed carriers Largest carrier Market

share of largest

carrier (percent) Market

share of five largest

carriers (percent)

Rank of largest

BCBS carrier Market

share of all BCBS carrier( s) (percent)

Texas 59 a Employers Health Insurance Company 13.9 36.1 2 6.9 Utah 44 IHC
Health Plans, Inc. 29.1 83.5 2 22.7 Vermont 6 MVP Health Plan 45.8 98.6 5
2.6 Virginia o 56 NA NA NA NA NA Washington p q Premera Blue Cross 40.5 86.5
1 78.8 Wisconsin 64 United Healthcare of WI h 16.1 h 45.4 h 2 h 9.1 h
Wyoming 14 BCBS of WY n 38.5 n 55.1 n 1 n 38.5 n NA = not available.

Notes: Reported data are for December 2000 unless otherwise noted. Ranking
and market share data are based on the number of covered lives unless
otherwise noted. Three states did not respond to the survey: Nevada, New
Mexico, and Rhode Island. In addition, five states responded but did not
provide data on small group carriers or on market share: Arkansas,
Louisiana, Mississippi, Pennsylvania, and West Virginia.

a Data are for December 2001. b Data only include carriers regulated by the
California Department of Managed Health Care. c Data are for December 1999.
d Georgia reported that there are no standard reporting sources on the
number of carriers and the total number of covered lives in the small group
market, but estimated the number of carriers at about 100 and estimated the
total number of covered

lives to be 500, 000. We used the estimated number of covered lives to
calculate rankings and market share. e Ranking and market share calculation
are based on the number of covered small employer groups.

f Ranking is based on gross premiums. g Data are for March 2001. h Ranking
and market share calculation are based on gross premiums. i A Montana
official estimated 10 or fewer carriers had plans that were approved for the
small group market. j New Hampshire did not report data for the five largest
carriers. Market share calculation is based on the data reported for the two
largest carriers. k Data are for September 2001. l Data are for January
2002.

m Data are for January 2001. n Ranking and market share calculation are
based on the number of covered employees. o Data are for November 2001. p
Data are for various time periods in 2000 and 2001.

q Washington reported that 16 state- based carriers and an unknown number of
out- of- state carriers offer health insurance in the small group market.
Source: GAO survey of state insurance regulators.

(290170)
*** End of document. ***