Overall health plan administrative spending stable

Minnesota HMOs and managed health plans have among the nation’s lowest administrative costs. Since 1993, administrative costs have held at about 9 to 10 percent of premium revenue. The Minnesota Department of Health requires health plans to report administrative spending in 15 categories, ranging from taxes and assessments to customer service, fraud prevention and detection and health and wellness programs.

Taxes and assessments paid to the state of Minnesota and federal government are the largest component of administrative costs. In 2016, policyholders paid $370.8 million in taxes and assessments. The chart below shows 90.96 percent of health plan expenses pay for medical care.  Administrative expenses total 9.04 percent of expenses, as detailed below.

Source: MCHP member health plan data as reported to the Minnesota Department of Health. Prepared by Minnesota Council of Health Plans, June 2017