National Administrative Health Care Expenditures
(including Net Cost of Private Health Insurance)

related resources: Total Expenditures     Per Capita Numbers    Share of National Health Expenditures    Share of GDP    Data Tables

The largest portion of this category is the net cost of private health insurance. The net cost of insurance is the difference between benefits and premiums. This difference, which includes administrative costs, and for some sources of data, additions to reserves, rate credits and dividends, premium taxes, and profits or losses, is estimated separately for the various types of insurers. For a detailed explanation of the net cost of private health insurance, please refer to this CMMS document.

The next largest portion is comprised of the administrative expenses of government programs. Although all programs incur administrative expenses, not all report them separately from other items. Typically, those that do report administration are the bigger programs, accounting for 95 percent of Federal personal health care expenditures and for 88 percent of State and local personal health care expenditures in 2004.

The smallest portion is comprised of the administrative expenses associated with health activities of philanthropic organizations. Specifically, these are the overhead expenses incurred by donor organizations--those that channel money to providers or researchers. Estimates of the level of administrative expense were made for philanthropic foundations, for voluntary health agencies, and for United Way campaigns, based on published and unpublished data from national associations of the various groups.