Private Health Insurance: Number and Market Share of Carriers in 
the Small Group Health Insurance Market in 2004 (13-OCT-05,	 
GAO-06-155R).							 
                                                                 
As a follow-up to our 2002 report on the competitiveness of the  
small group health insurance market, Congress requested updated  
information on each state and the District of Columbia. 	 
Specifically, Congress asked us to identify--for each state--the 
number of carriers licensed in the small group market, the	 
largest carriers, and their market share.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-155R					        
    ACCNO:   A39478						        
  TITLE:     Private Health Insurance: Number and Market Share of     
Carriers in the Small Group Health Insurance Market in 2004	 
     DATE:   10/13/2005 
  SUBJECT:   Employee medical benefits				 
	     Health insurance					 
	     Health insurance cost control			 
	     Small business					 

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GAO-06-155R

United States Government Accountability Office Washington, DC 20548

October 13, 2005

The Honorable Olympia J. Snowe
Chair
Committee on Small Business and Entrepreneurship
United States Senate

The Honorable Christopher "Kit" Bond
United States Senate

The Honorable James M. Talent
United States Senate

Subject: 	Private Health Insurance: Number and Market Share of Carriers in
the Small Group Health Insurance Market in 2004

As a follow-up to our 2002 report on the competitiveness of the small
group health insurance market,1 you requested updated information on each
state and the District of Columbia. Specifically, you asked us to
identify-for each state-the number of carriers2 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, health plans, or both 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 47 states. However, not all 47 states had the
information needed to answer all of the questions. For example, 40 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-35- defined a small group as 2 to 50 employees, 10 defined a
small group as 1 to 50 employees, and 1 had another definition.3 We did
not verify the information provided by the states. We performed our work
from August through October 2005 in accordance with generally accepted
government auditing standards.

The following summarizes our findings:

o  	The median number of licensed carriers in the small group market per
state was 28, with a range from 3 in Rhode Island to 75 in Georgia.

1 GAO, Private Health Insurance: Number and Market Share of Carriers in
the Small Group Health
Insurance Market, GAO-02-536R (Washington, D.C.: Mar. 25, 2002).
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 Missouri defined small group as from 3 to 25 employees.

                GAO-06-155R State Small Group Insurance Markets

o  	The median market share of the largest carrier in the small group
market was about 43 percent, with a range from about 19 percent in Texas
to about 93 percent in North Dakota.

o  	The five largest carriers in the small group market, when combined,
represented three-quarters or more of the market in 26 of the 34 states
supplying information, and they represented 90 percent or more in 12 of
these states.

o  	Thirty of the 40 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 1 of the remaining 10
states, a BCBS carrier was among the five largest carriers.

o  	The median market share of all the BCBS carriers in the 34 states
supplying information was about 44 percent, with a range from about 6
percent in Wisconsin to about 93 percent in North Dakota; in 13 of these
states BCBS carriers combined for half or more of the market.

o  	The market share of the largest small group carrier has increased
since our 2002 report. The median market share of the largest small group
carrier was about 43 percent, compared to the 33 percent reported in 2002.
The combined market share of the five largest small group carriers
represented three-quarters or more of the market in 26 of 34 states,
compared to 19 of 34 states reported in 2002. Finally, the median market
share of all the BCBS carriers in 34 reporting states was about 44
percent, compared to the 34 percent reported in 2002.

                                   _ _ _ _ _

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 arranged with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution of it until 30
days after its issue date. Copies will then be made available upon
request. In addition, the report will be available at no charge on the GAO
Web site at http://www.gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last page
of this report. Please call me at (202) 512-7119 if you have any
questions. Major contributors to this report were Randy DiRosa, Assistant
Director; Iola D'Souza, and M. Peter Juang.

John E. Dicken Director, Health Care

Enclosure

             Page 2 GAO-06-155R State Small Group Insurance Markets

                              Enclosure Enclosure

Number of Carriers, Largest Carrier, and Market Share Data for Small Group
                       Health Insurance Carriers by State

                                                    Market share Rank of              
               Number                  Market share of five      largest Market share 
                 of                    of largest   largest       BCBS   of all BCBS  
              licensed                 carrier      carriers     carrier carriers     
    State     carriers Largest carrier (percentage) (percentage)         (percentage)
Alabama          NA BCBS of Alabama          78a           NA       1           NA 
Alaskab              Premera Blue                                                  
                    12      Cross                66          100       1           66
                           United                                                     
Arizona               Healthcare                                      
                    53  Insurance Co.            29           66       2           19
                           United                                                     
  Colorado               Healthcare                                      
                    27  Insurance Co.            24           72       3           13
 Connecticut        25   Anthem BCBS             NA           NA       1           NA 
  Delaware                 BCBS of                                                    
                    16    Delaware               58           99       1           58
                       Group                                                          
                       Hospitalization                                   
 District of           & Medical                                         
  Columbia          13 Services (BCBS)           43           97       1           65
                           United                                                     
Florida               Healthcare                                      
                    29  Insurance Co.            22           78       3           31
                         BCBS Health                                                  
Georgia              Care Plan of                                     
                   75c    Georgiac             27 c          65c      1c          41c
    Idaho           16  BCBS of Idaho            45           97       1           87 
  Illinois          51       NA                  NA           NA      NA           NA 
    Iowa               Wellmark BCBS                                                  
                    60 of Iowa                   56           91       1           68
Kansas           28 BCBS of Kansas            NA           NA       1           NA 
  Kentuckyb         10   Anthem BCBS             43           93       1           43 
                       Louisiana                                                      
  Louisiana            Health Service                                    
                       & Indemnity                                       
                    35 (BCBS) d                29 d          85d      1d          54d
    Maine           12   Anthem BCBS             48           98       1           63 
                          Carefirst                                                   
  Maryland               Bluechoice,                                     
                    16      Inc.                 43           90       1           59
                            BCBS                                                      
Massachusetts       25  Massachusetts            32           86       1           39
  Michigan                 BCBS of                                                    
                    45    Michigan               62           78       1           69
                           BCBS of                                                    
  Minnesota         11   Minnesotad             45d          98d      1d          45d
                           Healthy                                                    
  Missouri              Alliance Life                                    
                    38  Insurance Co.            46           87       3            8
Montana          13 BCBS of Montana           36           85       1           36 
                       Health Plan of                                                 
Nevada           35     Nevada                NA           NA      NA           NA
 New Jersey             Aetna Health,                                                 
                    16      Inc.                 37           86       2           27
  New Yorke         29     Oxford                21           63       2           36 

             Page 3 GAO-06-155R State Small Group Insurance Markets

                              Enclosure Enclosure

                                             Market share Rank of              
              Number            Market share of five      largest Market share 
                  of            of largest   largest         BCBS of all BCBS  
            licensed  Largest   carrier      carriers     carrier carriers     
State    carriers  carrier   (percentage) (percentage)         (percentage)
North             BCBS of                                                   
  Carolina           North                                        
                  32 Carolina             54           89       1           54
                      Noridian                                                 
North               Mutual                                     
Dakota            Insurance                                    
                   9 Co. (BCBS)           93           99       1           93
                     Community                                                 
    Ohio             Insurance                                    
                  63 Co. (BCBS)           32           79       1           32
                       Group                                                   
                       Health                                     
  Oklahoma           Service of                                   
                      Oklahoma                                    
                  36   (BCBS)             30           71       1           49
                     Lifewise                                                  
Oregon            Health                                       
                     Plan of                                      
                  12 Oregon               25           79       5           14
                     Blue Cross                                                
Rhode             and Blue                                     
Island            Shield of                                    
                     Rhode                                        
                   3 Island               NA           NA       1           NA
South             BCBS of                                                   
  Carolina           South                                        
                  29 Carolina             49           87       1           49
                      BCBS of                                                  
 Tennessee        41 Tennessee            49           85       1           49
                       United                                                  
Texas             Healthcare                                   
                     Insurance                                    
                  58    Co.               19           59       3           17
                     Regence                                                   
Utahb             BCBS of                                      
                  22 Utah                 40           93       1           40
  Vermont             BCBS of                                                  
                  12  Vermont             73          100       1           84
  Virginia           Anthem                                                    
                  45 BCBSf                NA           NA       1           NA
 Washington           Premera                                                  
                  12 Blue Cross           57           92       1           85
                     Blue Cross                                                
    West             Blue                                         
  Virginia           Shield,                                      
                  33 Inc.                 43           77       1           43
                       United                                                  
 Wisconsin           Healthcare                                   
                         of                                       
                  50 Wisconsind          20d          49d      3d           6d
                      BCBS of                                                  
  Wyoming         15  Wyoming             40           74       1           38

Source: GAO survey of state insurance regulators.

Legend: NA = not available.

Notes: Reported data are for December 2004 unless otherwise noted.

Ranking and market share data are based on the number of covered lives
unless otherwise noted.

Four states did not respond to the survey: California, New Hampshire, New
Mexico, and Pennsylvania. In addition, six states did not provide data on
small group carriers or on market share: Arkansas, Hawaii, Indiana,
Mississippi, Nebraska, and South Dakota.

             Page 4 GAO-06-155R State Small Group Insurance Markets

                              Enclosure Enclosure

aThe Alabama Department of Insurance estimated that BCBS of Alabama
represented about 75 to 80 percent of
the small group market. Seventy-eight percent represents the rounded
midpoint of that range.
bData are for December 2003.
cGeorgia 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 75, and estimated the total
number of covered lives to be 851,365. We used the estimated number of
covered lives to calculate rankings and
market share.
dRanking and market share are based on gross premiums.
eData are for January 2005.
fTotal premium data or number of covered lives are not collected for the
small group market. A Virginia Bureau of
Insurance official reported that Anthem BCBS was clearly the largest
carrier in the small group market.

(290490)

             Page 5 GAO-06-155R State Small Group Insurance Markets

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