BCBS – Taxes Are 17% of Administration Expenses

tax1These results are excerpted from the Blue Cross Blue Shield edition of the 2016 Sherlock Expense Evaluation Report.

Douglas B. Sherlock CFA, on June 22, 2016 at 3:02 PM said:

Messrs. and Mesdames:

The Blue Cross Blue Shield Plan administrative costs that are controllable by management increased at a median rate of 1.2% PMPM in 2015. This was essentially the same as the prior year’s 1.1% increase and is far lower than the 8.5% increase in 2013.

Similar trends are apparent in many of the expense clusters and in staffing ratios. This trend suggests continued efforts by Blue Cross Blue Shield Plans to optimize their administrative activities.

Competitive pressures, the MLR rules and taxes associated with the Affordable Care Act have catalyzed focus on administrative expense management. For instance, Miscellaneous Business Taxes now comprise 17% of total administrative costs.

These results are excerpted from the Blue Cross Blue Shield edition of the 2016 Sherlock Expense Evaluation Report. The results are based on our detailed surveys of the 2015 operating parameters of 17 Blue Cross Blue Shield “primary licensees”, comprising approximately one-half of the U.S. total. The participants serve approximately 65% of the membership of Blue Cross Blue Shield Plans that are not publicly-traded.

Douglas B. Sherlock CFA

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