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The Lost Costs With Administrative-Related Tasks With Group Health Plans

Health coverage is expensive for both individuals and companies that provide it. The costs affect various areas of the medical field, including drug prices, coverage costs, and costs of care and visits. Part of these costs result from the administrative handling of health insurance logistics, which also affects the rest of the field. According to the CAQH Index, in 2019, it was estimated that $350 billion is spent annually in the US on healthcare administration due to its complexity. Data from the 2019 CAQH Index also suggests that $40.6 billion or 12% of the $350 billion spent on administrative complexity, is associated with conducting administrative transactions tracked by the CAQH Index. By moving from manual and partially electronic processing to fully electronic processing, $13.3 billion or 33% of existing annual spending on administrative transactions could be saved. The industry has already saved over $102 billion annually by automating these transactions. However, small business owners tend to bear the brunt of these costs. This affects their ability to recruit and retain talent, as they struggle to offer benefits like health insurance. To curb this expense, one method is the increased use of digital materials, which can save $2.7 billion of the $9.9 billion total savings opportunity by switching from partially electronic transactions to fully electronic transactions. The medical field has lagged in comparison to other fields in terms of digitization due to concerns over confidentiality and security, but the COVID-19 pandemic has resulted in rapid inroads in digitization.

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Health coverage is expensive for both individuals and companies that provide it. The costs affect many areas of the medical field, including drug prices, coverage costs, and costs of care and visits. Part of these costs are due to the administrative handling of health insurance logistics, which also affects the rest of the field. According to the CAQH Index, in 2019, an estimated $350 billion was spent annually in the United States on healthcare administration costs due to its complexity. Data from the 2019 CAQH Index shows that $40.6 billion, or 12% of the $350 billion spent, is associated with conducting administrative transactions tracked by the CAQH Index. By transitioning from manual and partially electronic processing to fully electronic processing, $13.3 billion, or 33% of existing annual spending on administrative transactions, could be saved. The industry has already saved over $102 billion annually by automating these administrative transactions. Administrative costs are a significant pain point for small businesses, as they struggle to offer benefits like health insurance while competing with larger employers. Solutions include increased use of digital materials, which can save $2.7 billion of the $9.9 billion total savings opportunity in the medical industry. The COVID-19 pandemic has resulted in rapid inroads in digitization in the medical field, but administrative costs remain high.

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