The US spends hundreds of billions of dollars annually on health insurance administration, but variation in administrative costs and profits remains inadequately understood. We used regulatory filings to estimate state-level, all-plan administrative spending and profit in 2023 for each of three market segments: fully insured commercial coverage, Medicaid, and self-funded commercial coverage. Across state markets for fully insured coverage, median all-plan administrative spending was 599 per person per year, with median profits of 63 per person per year. Administrative costs for self-funded coverage were substantially lower (median, 285 per person per year), as were profits (22 per person per year). Administrative spending was highest in Medicaid. In states with Medicaid managed care, administration and plan profit accounted for 772 per person per year. Total spending was about 250 per person per year lower in states without Medicaid managed care. Per person per year spending was highly variable across states for all segments. Conservatively, reducing administrative spending and profits in states with above-median levels to the cross-state median could save approximately 6 billion, 9 billion, and 4 billion in the fully insured, Medicaid, and self-funded segments, respectively.
Buxbaum et al. (Sun,) studied this question.