Sherlock: Analysis Of The Economies Of Scale Of Blue Cross Blue Shield Plans
Submitted By Anonymous, Created 09/09/2014 - 17:37
- Of the total administrative costs of health plans, only ten functions, totaling 17.8% of all administrative expenses were subject to economies of scale
- While these scalable areas had a P-Value of 10% or less, there were additional factors other than scale that explained cost differences between the Plans
- A doubling of the size of the health plan would lead to scalable administrative costs equal to 85.8% of their pre-doubling per member cost value
- The modest slope of the scale line (85.8%) combined with the modest proportion of scale expenses subject to scale effects (17.8%) means that the overall effect of scale is modest
- Product mix increasingly distinguishes the otherwise very similar Blue Cross Blue Shield Plans
- This year’s scale study, when compared to last years, is consistent with the theory that the costs to adapt the Affordable Care Act were higher than for smaller plans
Source: Sherlock
Source URL: http://sherlockco.com/press/