PHILADELPHIA–(BUSINESS WIRE)–Blue Cross Blue Shield Plans had administrative cost increases of 5.9% in 2017, far higher than the previous three years, and the highest since 2013. Last year’s increase was 0.6%. Increases are calculated for continuously participating Plans, after backing out the effect of mix changes.
On an as-reported basis, per member costs grew by 5.1% compared with 0.8% the prior year. A shift in mix to a less expensive product meant that reported expenses appeared to increase by less than if the mix was constant. ASO/ASC increased as commercial insured membership declined. Notwithstanding, Medicare Advantage was the fastest growing product.
These increases exclude the effect of ACA-related and other taxes, which plummeted, and led to total administrative expense decline of 2.3%.
Every cluster of expenses accelerated. Account and Membership Administration increased by 3.0% per member, slower than overall administration. Customer Services and Claims functions declined while Rating and Underwriting, Corporate Executive, Association Dues, Provider Network Management and Services, Medical Management, Actuarial increased, sometimes sharply.