A teenage boy’s life-changing scoliosis surgery was delayed this year when Blue Cross Blue Shield of Alabama denied coverage just days before the procedure. The case, involving neurosurgeon Dr. Richard Menger, is now drawing fresh scrutiny to Alabama’s heavily concentrated health insurance market — where one insurer holds overwhelming power.
Blue Cross Blue Shield of Alabama commands a staggering 94% share of the large-group insurance market in the state, according to the Kaiser Family Foundation (KFF). The company also dominates the individual insurance market, raising concerns about access, affordability, and fairness in coverage decisions.
“This kind of market dominance amplifies every flaw in the insurance system,” said Dr. Menger, who has practiced in Alabama since 2019. “We’re stuck fighting for coverage while patients suffer.”
Alabama had the highest denial rate for in-network individual market claims in 2023, with 34% of claims rejected — more than double the national average. In neighboring Mississippi, where the largest insurer holds a smaller market share, the rate was 15%.
Blue Cross Blue Shield of Alabama says it is working to improve prior authorization processes, aiming to respond to most requests in near real-time by 2027. The insurer also claims to face competition in the state from other providers and Medicare plans. “We know Alabamians have a choice, and we don’t take that for granted,” a spokesperson said.
Still, health policy experts and providers argue that such high levels of market concentration harm patients and undermine care. “More competition tends to drive lower premiums and better coverage,” said Leemore Dafny, a Harvard professor who studies insurance markets.
Alabama is not alone. According to KFF, 18 U.S. states have health insurance markets where one company controls at least 75% of the large-group plans. Alaska and Wyoming have similarly high levels of insurer dominance.
Doctors say the lack of competition allows insurers to pay less to providers, impose more prior authorizations, and deny more claims. Smaller, rural hospitals, in particular, struggle to negotiate rates or even get an insurer to answer their calls.
“The financial squeeze play is everywhere,” said Dr. Bruce Scott, former president of the American Medical Association. “Consolidation has only made it worse.”
Although federal regulators have occasionally blocked large healthcare mergers, experts argue that U.S. antitrust enforcement hasn’t kept pace with the health industry’s rapid consolidation.
For the teenage boy whose surgery was delayed, insurance approval eventually came — but only after weeks of uncertainty. “This prior authorization nonsense is hurting patients,” said Dr. Menger. “It’s clear: more competition would make things better.”