A Brief Look at Outsourced Service Spending among Health Care Plans

June 4, 2019

According to Mark Farrah Associates’ Health Coverage Portal^TM, outsourced services include expenses for administrative services, Electronic Data Processing (EDP), and membership services that are contracted out to a third party or vendor. For NAIC (National Association of Insurance Commissioners) reporting health insurance companies, annual outsourced service spending increased by 24% from $11.3 billion in 2016 to $14.0 billion in 2018. Accordingly, outsourced service spending trends show progressive expenditures across the top 5 health plans, measured by outsourced service spending.

HCSC and Humana consistently spent over $1 billion annually on outsourced services, with $3.745 billion and $3.699 billion expended respectively over the three-year period. Centene saw the largest actual increase in spending by over $498 million over the three-year period. Horizon BCBS of NJ experienced the largest percentage gain between 2016 and 2017, more than doubling outsourced service spending, with $0.643 billion spent in 2018.

Please note: California managed care plans do not file financial statements with the NAIC and are not included in this analysis.  In addition to CA HMO's, life, property, and fraternal plans do not file this information for their health business for the NAIC.  For more information about Health Coverage Portal, please visit our website or call 724.338.4100.

About Mark Farrah Associates (MFA)

Mark Farrah Associates (MFA) is a leading data aggregator and publisher providing health plan market data and analysis tools for the healthcare industry.  Our product portfolio includes Health Coverage Portal™, County Health Coverage™, Medicare Business Online™, Medicare Benefits Analyzer™, and Health Plans USA™.  For more information about these products, refer to the informational videos and brochures available under the Our Products section of the website or call 724-338-4100.

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