Competition in the health insurance market is often considered a key factor in improving quality and controlling costs. In theory, when consumers have multiple insurers competing for their business, companies must offer better plans or more competitive pricing.
In practice, however, the level of competition in health insurance markets varies widely across the country.
We wrote about this topic back in 2019 and thought it would be worth revisiting to see how the market looks today.
Research from the U.S. Government Accountability Office shows that many health insurance markets remain highly concentrated. In a 2024 report examining insurer participation between 2011 and 2022, the GAO found that three or fewer insurers held at least 80 percent of market share in at least 35 states across the individual and employer group markets.
When only a small number of companies dominate a market, economists describe this structure as an oligopoly. Oligopolies are common in industries with high barriers to entry, and health insurance is no exception. Large capital requirements, regulatory complexity, and provider contracting networks make it difficult for new insurers to enter the market.
While such markets may remain stable, limited competition does not always lead to lower prices or greater innovation.
At the same time, there are signs that competition in the individual market has improved compared with the early years following implementation of the Affordable Care Act.
According to analysis from the Kaiser Family Foundation, the average number of insurers participating in ACA Marketplace exchanges has increased in recent years. In 2025, Marketplace consumers had access to an average of 9.6 insurers per state, and 97 percent of Healthcare.gov enrollees had at least three insurers to choose from.
Even so, the number of insurers available can vary significantly from one region to another. Some counties still have limited carrier participation, while others have a broader range of options.
For agents working with individual and small-group clients, market concentration can affect how coverage discussions unfold.
In some areas, the number of carrier options may be relatively limited, which can make it challenging to give clients meaningful options. In other areas, agents may have a broader selection of plans complicating the process of comparing plans across multiple insurers and still finding that a handful of carriers might account for the majority of enrollment.
Understanding the structure of the local market helps agents set realistic expectations when discussing coverage options with clients and prospects.
Even in markets with fewer insurers, agents can still provide value by helping clients understand the full range of coverage strategies available.
For example, depending on a client’s situation, alternatives such as short-term health insurance or fixed indemnity plans for individuals and Individual Coverage HRAs (ICHRAs) for small employers may be worth discussing.
The goal is not simply to compare plans from a limited group of carriers but to evaluate the different approaches that might meet a client’s needs.
Health insurance markets are shaped by a variety of factors, including regulation, provider networks, and regional demographics. As a result, competition does not always function the same way it does in other industries.
This is one reason knowledgeable brokers remain valuable to consumers. By understanding both the available plans and the broader strategies that may apply to a client’s situation, agents can help individuals and employers navigate a market that is often more complicated than it first appears.