Administrative costs of health insurance

Obamacare takes aim at what is perceived as high health insurance premiums, driven in large part by insurance company profits and administrative costs. In fact, under the law insurers are required to rebate to customers such costs that exceed 15 to 20% of total premium costs depending on individual or group markets.

If that sounds like a big deal or big accomplishment (other than good political press), it’s not. The historical percentage of premium devoted to administration has been at or below 15% for decades.

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