PHILADELPHIA, PA — Administrative costs for independent and provider-sponsored health insurance plans continued to rise in 2025, although at a slower pace than the previous year, reflecting higher labor expenses and changes in workforce composition even as staffing levels declined, according to new benchmarking data released by Sherlock Company.
The Gwynedd Valley-based healthcare consulting firm reported median administrative costs of $59.60 per member per month (PMPM) in 2025, up from $55.67 a year earlier. Administrative expenses represented 9.8% of premium equivalents, an increase of 0.5 percentage points from 2024.
The findings are based on the 2026 edition of the company’s Independent/Provider-Sponsored plan benchmarks, which surveyed 13 health plans serving approximately 9 million members.
Overall per-member administrative costs increased 5.3% in 2025, slowing from 6.2% growth in 2024 and marking the lowest annual increase since 2021, when health plans were still adjusting operations following the COVID-19 pandemic.
Costs associated with account and membership administration rose 6.4%, also the slowest rate of growth since 2021, according to the report.
Sherlock attributed the cost trends to several factors, including a 5.4% decline in staffing ratios, higher employee compensation that it indicated may reflect a shift toward more experienced or higher-paid workers, and lower non-labor expenses.
The company also noted that the increase in Medicare Advantage enrollment among participating plans contributed to the higher median per-member administrative costs.
The results are summarized in the company’s Plan Management Navigator, which draws from the 2026 Independent/Provider-Sponsored plan edition of the Sherlock Benchmarks. Sherlock stated the benchmarking program includes 29 years of data spanning more than 1,000 health plan years and is used by insurers to evaluate administrative costs, operational performance, and strategic planning.
Collectively, participants in the company’s benchmark studies serve about 50 million Americans across independent/provider-sponsored plans, Blue Cross Blue Shield plans, Medicare plans, and Medicaid plans. Sherlock stated that organizations using its benchmarking data have served nearly 200 million members since June 2023.
Additional information is available at https://www.sherlockco.com/navigator.
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