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Health Plan Administrative Costs Lower

Health Plan Administrative Costs Lower

A new study conducted by Sherlock Company has found that private health plan administrative costs lower than it was estimated. Sherlock has revealed that the expenses for administering benefits showed only an average of 9% across all the policies sold. The company has considered combined data from Blue Cross and Blue Shield (BCBS) companies as well as non-Blue companies' health plans that participated in the performance benchmarking researches in the year of 2008.

Advocates of creation of new and government-operated plan often incorrectly quote inflated estimations of health plan's administrative costs and that is one of the reasons for requirement for such program. Actually the health plan administrative costs lower than it was estimated; as illustrated by the study.

According to Scott P. Serota, the CEO and president of Blue Cross and Blue Shield Association (BCBSA), BCBS companies keep on looking for new ways so that they can efficiently help consumers keeping their health insurance premiums reasonable. There are some factors of healthcare overhaul, if done correctly, can help reducing healthcare administrative expenses. For instance, state-oriented healthcare exchanges can help consumers making their health insurance purchase easier and this way they can make administrative operations simpler.

Sherlock Company study has found health plan administrative costs lower than estimated. The study has shown that the prior estimations that the private health plan administrative expenses were 2 -3 times more than the actual expenses were on the basis of old estimates; and so, that didn't reflect the changes taken place in the industry, including advancement in the electronic processing that not only speeds up payments to the providers but also reduces costs.

Douglas B. Sherlock, the president for Sherlock Company said that older reports relied on the outdated estimations, while the claims were paper-oriented and modern electronic processes were so immature to work. It is known for its insightful and impartial investigations of health plan's administrative expenses. On a whole, the report has demonstrated that the health plan's administrative expenses have been hugely overstated.

The study has also shown that the private health plans perform the administrative works that Medicare performs, at much lower rate. Private health plans are capable of performing administrative works for 12.51 USD per member every month compared to 13.19 USD every month for the Medicare. In addition to that, these private plans conduct extra administrative works compared to the conventional Medicare, included of wellness program and care coordination, that result in far better care and low costs for the employers and patients enrolled in the private plans.

You can get the entire Sherlock report at

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