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BLUE CROSS‐BLUE SHIELD ADMINISTRATION COSTS: A STUDY OF NON‐PROFIT HEALTH INSURERS *
Author(s) -
BLAIR ROGER D.,
GINSBURG PAUL B.,
VOGEL RONALD J.
Publication year - 1975
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1975.tb00990.x
Subject(s) - blues , circumstantial evidence , economics , administration (probate law) , economies of scale , profit (economics) , actuarial science , business , microeconomics , law , management , political science
The administrative costs of Blue Cross and Blue Shield are examined in this paper. The main finding is that the Blues appear to enjoy substantial managerial slack. This striking conclusion is based upon some rather circumstantial evidence. First, no economies of scale are found which is not true of the commercial insurers. Second, the variance in costs is much smaller for those costs associated with Medicare administration than for the Blues own business. Finally, despite the cost advantages of the merged organizational form, this is not the more prevalent form.