Medicare Advantage Plans Show Slowed Administrative Cost Growth in 2024

In 2024, Medicare Advantage (MA) plans experienced a deceleration in administrative expense growth, with per member costs rising by 3.6%, down from 6.2% in 2023 when holding product mix constant.

When accounting for shifts toward MA product portfolios, the reported growth was 6.4%, slightly higher than the 5.2% reported in 2023. The median per member per month (PMPM) administrative cost for MA products stood at $140.02.

A notable increase occurred in the Account and Membership Administration cluster, which accelerated to 12.5% growth from 6.4% the previous year. However, when adjusting for product mix, this growth was more moderate at 6.8% versus 5.1% previously. Meanwhile, other administrative expense clusters either grew at slower rates or declined. Staffing levels for MA plans decreased despite higher compensation and non-labor costs. The evolving administrative expense trends reflect broader industry dynamics, including the increasing appeal of MA plans amidst revenue and health benefit cost pressures.

This analysis is derived from the 2025 Medicare Plan edition of the Sherlock Benchmarks, a comprehensive survey of 11 Medicare-focused plans that collectively serve a substantial share of MA members outside the five largest plans. The Sherlock Benchmarks offer a detailed assessment of health plan administrative activities, costs, and operational drivers, providing valuable metrics to optimize costs and support strategic planning.

Plans using Sherlock Benchmarks serve over 180 million members across Blue Cross Blue Shield, Medicare, and Medicaid universes as of June 2022.

The Sherlock Company, established in 1987 and headquartered in Pennsylvania, delivers specialized financial management solutions for health plans. An upcoming free webinar will further discuss these findings with industry stakeholders.