Close Close

Life Health > Health Insurance > Health Insurance

Sherlock Analyzes Plan Costs

Your article was successfully shared with the contacts you provided.

At some types of health plans, per-member administrative cost trends increased to 11.5% in 2008, from 4.9% in 2007.

Sherlock Company, Gwynedd, Pa., came up with those figures when it looked at “independent/provider-sponsored plans.”

That definition includes regional plans that are not Blue Cross and Blue Shield plans and, in most cases, are or were partly or entirely owned by health care providers.

The 16 plans included in that group provide health coverage for 5.7 million people.

Marketing costs at the plans rose about 14% in 2008, up from an increase of about 10% in 2007, while account and member administration costs rose about 6%, up from an increase of about 4.8% in 2007.

In many cases, rates of increases were affected by changes in product mix, Sherlock says. The firm notes that participating in Medicare Advantage can be especially expensive.

“The very rapid growth of Medicare Advantage, combined with its high costs has led to a significant acceleration in administrative expense trends,” Sherlock reports.

Marketing costs, for example, rose just 6% in 2008 when viewed on a mix-adjusted basis, Sherlock estimates.