Hawai'i is among the least competitive states for health insurance, with the top two providers accounting for 98 percent of the private coverage, according to a new report from the American Medical Association.

The study, "Competition in Health Insurance," looked at commercial coverage in 42 states and the District of Columbia to determine the level of competition in each market.

It determined what everyone living in Hawai'i already knows: The Hawaii Medical Service Association and Kaiser Permanente dominate the market. But what was interesting was that no other state studied had as high a concentration.

The report said HMSA has 77 percent of the market and Kaiser 21 percent. It defined the market as fully insured enrollments in preferred provider programs and health maintenance organizations. It did not include in its computations people who receive their health care coverage through Medicare, Medicaid or the State Children's Health Insurance Program.

The market share number cited for HMSA was higher than the Hawai'i Insurance Division's estimate of about 67 percent.

Insurance Commissioner J.P. Schmidt said HMSA and Kaiser combined have about 88 percent of the market, with UHA, the Hawaii Medical Assurance Association and Summerlin Life and Health combining for about 12 percent of the market.

Schmidt said he has tried to foster more competition in the state for health insurers, including helping Summerlin come into the market and lobbying for rate regulation. Hawaii Medical Assurance Association recently announced it will purchase Summerlin's health plan membership in Hawai'i.

"I have tried different ways to provide choice and competition for Hawai'i's consumers because generally speaking that's a good thing," Schmidt said.

"Markets that are competitive and provide a number of choices have a lot less problems than the concentrated markets."

Insurers must present their proposed rate adjustments to the state Insurance Division before they can take effect. Schmidt said he believes Hawai'i has less of a problem with unreasonable rates than states without the regulation.

But he still receives complaints from doctors about payments they receive from HMSA and that doctors wanting access to the 67 percent of the market the insurer represents have little choice but to go with HMSA, an independent licensee of the Blue Cross Blue Shield Association.

"The doctors can't join together to negotiate with HMSA because of antitrust law," Schmidt said.

"I believe HMSA would ... argue that over the past couple of years they have been sensitive to the doctors and hospital complaints about reimbursements and have increased those."

The increased payments are one reason HMSA has had only one profitable quarter since the end of 2006. Increased medical care usage and lower financial gains from invested reserves also are responsible for the negative returns.

Kaiser also has had mixed financial results over the same period.

The American Medical Association said the results of its study show that market concentration is gaining nationally, with more states being counted among those where the two largest insurers have 70 percent of the market or more.

The group said this had not benefited the nation.

The study found that most markets it reviewed fit into the "highly concentrated" category, where insurers had the potential to raise premiums higher than in competitive markets while potentially holding payments to doctors and other health care providers to levels below those found in markets where there is lots of competition.

"These markets are ripe for the exercise of health insurer market power, which is detrimental to society," said the study.

"The near total collapse of competitive and dynamic health insurance markets has not helped patients," AMA President J. James Rohack said in a statement issued to the media.

"As demonstrated by proposed rate hikes in California and other states, health insurers have not shown greater efficiency and lower health care costs. Instead patient premiums, deductibles and co-payments have soared without an increase in benefits in these increasingly consolidated markets."

The association called for greater antitrust reviews for mergers among insurers.

In Hawai'i, the state just concluded the Hawaii Medical Assurance Association's proposed purchase of Summerlin's health plan membership is structured in such a way that it does not have authority to approve or reject the sale. It also determined the transaction does not fall within federal antitrust review regulations.