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Snowe, Bond, Lincoln, Durbin Ask GAO to Investigate Consolidation in Small Group Health Insurance Market

Press Release

Date: Sept. 24, 2008
Location: Washington, DC
Issues: Health and Health Care

U.S. Senate Small Business and Entrepreneurship Committee Members Olympia J. Snowe (R-Maine) and Kit Bond (R-Mo.), joined by Majority Whip Richard Durbin (D-IL) and Senator Blanche Lincoln (D-AR) requested on Tuesday that the Government Accountability Office (GAO) conduct a follow-up study to a 2005 report that showed that the five largest health insurance carriers represented three-quarters or more of the market in 26 of the 34 states supplying information. Since 2001, health insurance costs for small businesses have increased by 78 percent - far outpacing inflation and wage gains - and economists believe that much of the rise is attributable to a lack of competition in the marketplace for small group health insurance.

"I can attest to the fact that access to affordable health insurance remains a top concern for small businesses in Maine and across the country," said Senator Snowe, Ranking Member of the Senate Small Business and Entrepreneurship Committee. "The sad truth is that small group insurance markets like the one in my state of Maine have no real competition among insurers. No competition means higher costs. And higher costs mean no health insurance."

U.S. Senator Kit Bond said, "You do not need to be an economist to understand that when there is less competition in health insurance, those who need coverage the most will suffer from few choices and high costs. Congress can't continue to ignore this growing problem."

"Earlier this year, I introduced a bill - the Small Business Health Options Program (SHOP) Act - with Senator Snowe and others that aims to increase the number of insurers competing for the opportunity to insure our nation's small businesses," said Durbin. "This competition is crucial to making health insurance more affordable. An investigation by the GAO will help us better understand the current state of play."

To properly monitor and address the small business health insurance crisis, Senators Snowe, Bond, Durbin and Lincoln have asked GAO to determine for each state:

* The number of insurance carriers licensed in the small group market;

* The largest carriers and their market share; and

* The market share of the five largest carriers in the small group market.


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