The cost per enrollee for private health insurance expenses not related to direct care services (such as administrative costs and profits) continued to rise, from $85 in 1986 to $421 in 2003. The most rapid growth occurred in the 4-year period from 1987 to 1990, when these administrative costs rose 125%. For the six-year period from 1998 to 2003, administrative costs per enrollee nearly doubled (+95%).

Notes: These data show the net cost of private health insurance per private enrollee (including Blue Cross/Blue Shield, commercial insurance, HMOs, and self-insured plans), as calculated by the Centers for Medicare and Medicaid Services. Net cost of insurance is the difference between premiums earned and benefits incurred, and includes insurers’ costs of paying bills, advertising, sales commissions, and other administrative costs; net additions/subtractions from reserves; rate credits and dividends; premium taxes; and profits or losses. Private enrollment is estimated by CMS using the National Health Insurance Survey and the Current Population Survey.

Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group: 2003 National Health Care Expenditures Data Files for Downloading, file nhe03.zip, Administration and Net Cost of Private Health Insurance, at http://www.cms.hhs.gov/statistics/nhe/default.asp, and unpublished CMS data on private health insurance enrollment.