Independent/Provider-Sponsored Health Plans’ Administrative Expenses in 2025
Continued Decline in Administrative Expense Growth
Independent/Provider-Sponsored plans’ per member administrative costs grew by 5.3% in 2025 versus 6.2% in 2024. This was the lowest growth since the effects of Covid adaptation in 2021. Growth in costs for the cluster of Account and Membership Administration, at 6.4%, was the slowest growth since 2021. Median PMPM costs for all reporting Plans were $59.60 PMPM versus $55.67 PMPM last year as the Medicare Advantage mix increased.
At 9.8% of premium equivalents, health plan administrative costs were higher by 0.5 percentage points from 2024.
Administrative costs were affected by a 5.4% decline in staffing ratios, an increase in compensation likely affected by a shift towards more expensive employees and a decline in non-labor costs.
