Where are the efficiencies?

The head of the Massachusetts Association of Health Plans often asserts that the underlying rise in medical costs is the main contributor to rising health insurance premiums in the state. As often noted here, such costs are important and cannot be ignored.

However, she seems to have overlooked a really interesting chart in a government report. Look here, on page A-10.


Golly, we see an average annual increase in the administrative costs of Massachusetts insurers of 9.3%. How can this be the case? In other financial services industries, unit costs of transactions have gone down, not up. What is it about health care that suggests the opposite should be the case?