Blue Cross Blue Shield Administrative Costs Were 9.2% of Premium in 2010

PHILADELPHIA--(BUSINESS WIRE)-- Administrative expenses of Blue Cross Blue Shield (Blue) plans fell to 9.2% of premiums and equivalents in 2010, compared with 9.7% in 2009 and 9.9% in 2007. The per member per month (PMPM) cost growth of 1.0% compared with 2.5% last year. After eliminating the effect of product mix changes, Blue PMPM administrative costs grew by 1.8% in 2010, compared with 3.8% in 2009. Blue plans reported total administrative expenses of $27.33 per member per month.

These results are excerpted from the 2011 Blue Cross Blue Shield edition of the Sherlock Expense Evaluation Report (SEER), a benchmarking study completed through an in-depth survey of 27 Blue plans, 69% of the total, collectively serving 38.3 million Americans.

Because the Accountable Care Act limits health plans’ medical loss ratios and the weak economy has pressured plan enrollment and rates, health plans are optimizing their administrative expenses. Both as participants and licensees, health plans serving most Americans use SEER to guide their effective management of administrative expenses.

According to Douglas B. Sherlock, CFA, Sherlock Company’s president, “Modest growth in account and membership administration, combined with declines in corporate services costs, were the major factors in declines in cost growth in 2010.”

The Blue universe is among several benchmarked by Sherlock Company. Other universes include Independent/Provider-Sponsored plans, Medicare plans, Medicaid plans and TPAs. Collectively, the 59 plans serve approximately 50 million insured Americans.

Additional information will be published early next week in Plan Management Navigator, available upon request or through our website, The complete analysis is available in SEER. Please call for additional information.

We will also host a web conference on Thursday, July 7 from 2:00 PM to 3:00 PM Eastern Time to discuss the summary results. Douglas Sherlock will offer a brief presentation, followed by questions and answers. To participate in the web conference, please register at:

Once registered, dial-in information and a link to connect to the web will be provided in a confirmation email.

Sherlock Company (, based in North Wales, Pennsylvania, provides informed solutions for health plan financial management. Since its founding in 1987, Sherlock Company has been known for its impartiality and technical competence in service to its clients.


Sherlock Company
Douglas B. Sherlock, CFA
[email protected]

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