Research Report Targeting Highly Concentrated Insurer and Provider Markets for Rate Regulation
John Holahan, Claire O'Brien, Erik Wengle
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In this report, we present considerable data that identify rating areas with high premiums in the nongroup market and examine what makes them different. We provide results of a regression analysis that identifies factors correlated with high and low premiums and shows that high premiums are related to markets having a limited number of insurers and high levels of hospital concentration. We then identify seven approaches to identifying target areas based on measures of insurer and hospital concentration and levels of premiums.


The cost of health care in the United States is high compared with other advanced nations, partly because of differences in health care prices. To address this, some have suggested rate controls either through a public option or caps on payment rates. Despite the merits of public options or caps on payment rates, policymakers could face strong political opposition from providers and insurers, as well as from those with ideological opposition to government regulation. Rather than advocate broad-based policies, it may be more palatable to focus rate-setting options on the areas most obviously in need of regulation—areas with little insurer competition, high hospital concentration levels, or where premiums are high regardless of reason.


  • In 2024, the average national benchmark premium is $473, which masks considerable variation among states and rating areas. State average benchmark premiums range from $886 in Alaska to $335 in New Hampshire.
  • In a regression analysis, we find that the number of insurers participating in the rating area was negatively correlated with benchmark premiums. The hospital system Herfindahl-Hirschman Index, a measure of market concentration, coefficient was positive and statistically significant, indicating that rating areas with high hospital system market concentration had higher benchmark premiums. Additionally, the type of insurer was also a highly significant factor.
  • In general, the proposed targeted markets are most often in small urban markets which are not big enough to have competitive insurer and hospital markets. Several targeted markets are in rural areas for the same reasons, but these are a smaller share of the population. Fewer large urban markets are targeted, but when they are targeted, many people can be affected.
Research Areas Health and health care
Tags Affordable Care Act Health care spending and costs Federal health care reform
Policy Centers Health Policy Center
Research Methods Quantitative data analysis