The administrative costs of non-profit health insurers

Interest in the efficiency or inefficiency of non-profit firms has spawned research on the administrative costs of Blue Cross and Blue Shield plans. Relying on plausible implications of the property rights theory of the firm, both Blair, Ginsburg, and Vogel (1975) and Vogel (1977) noted some evidence of inefficiency in these firms. Our analysis, however, utilizing their models and more recent data, reveals little convincing evidence for the view that Blue Shield plans are inefficient.