Blues administrative spending surged 5.9% in 2017, the highest in years

Spending by 14 Blue Cross and Blue Shield insurers on administrative activities increased by almost 6% last year. (jansucko/iStock/Getty Images Plus/Getty Images)

Despite the Trump administration's focus on cutting paperwork requirements, some insurers are seeing the opposite in their finances.

Spending by 14 Blue Cross and Blue Shield insurers on administrative activities, like auditing and underwriting, increased by 5.9% last year, far higher than the previous three years and the highest since 2013, according to a new report by the Sherlock Company.

Administrative spending for the Blues increased by 0.6% in 2016, decreased by 0.3% in 2015, and increased by 1.1% in 2014. Such spending increases topped 6.2% in 2013, as insurers were preparing for implementation of major components of the Affordable Care Act. 

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As a result of the increases, consumers received less bang for their buck as administrative expenses jumped to 8.9% of premium payments in 2017 compared to 8.3% the previous year. 

Per-member costs also grew by 5.1% compared with 0.8% the prior year, mainly driven by increased spending on sales and marketing, the study said. 

Regarding enrollment, commercial membership declined by 0.3%, Medicare Advantage increased by 7.0% and Medicaid decreased by 1.8%.

RELATED: Blues hit the jackpot under Republicans' tax law

Despite high administrative costs, many Blues appear to be doing just fine financially.  

The Sherlock study follows a recent analysis by A.M. Best that found that 13 Blues saved a total of $2.3 billion in taxes in 2017 as a result of the Republican tax law. Health Care Service Corporation was the biggest winner among the Blues, raking in $1.1 billion in savings, followed by BCBS Michigan at $358 million.

Sherlock, however, did not say which individual insurers it analyzed in its report.

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