February 22, 2018
Minnesota health plan administrative spending hits ten-year high
Minnesota health plan administrative spending in 2016 reached about $1.8 billion, or 7.7 percent of their total expenditures. This is highest level of administrative spending by Minnesota health plans since 2009, according to a Minnesota Department of Health report released today.
2016 health plan per member administrative spending was also the highest it has been during the past ten years at $343 per member, as reported in Administrative Costs at Minnesota Health Plans in 2016, an annual report required by the state legislature.
Administrative costs include health plan expenses related to claims processing, setting up provider networks, marketing products, and other business activities. They do not include health plan profits or taxes.
The report looked at the administrative costs of 50 health plans that each collected more than $3 million in health premiums from Minnesota residents. Administrative spending for Minnesota’s major nonprofit health plans, such as HealthPartners, Medica, Blue Cross Blue Shield of Minnesota, PreferredOne and UCare ranged from about 4 to 12 percent. Among this group, Medica health plans (4.2 percent) and HealthPartners (6.8 percent) reported comparatively low administrative costs. The insurer with the lowest administrative costs was Cigna Health and Life Insurance Company at 2.0 percent. The highest administrative spending was calculated for Principal Life Insurance Company at 36.2 percent.
The report is available online at the MDH health economics webpage.
Minnesota Department of Health