Detroit Free Press Interviews New BC/BS CEO Tricia Keith

A lot to digest here.  Blue Cross / Blue Shield is Michigan's largest health care insurer and, as such, a trend setter in health care policy:

https://www.freep.com/story/money/business/michigan/2025/02/17/new-blue-cross-ceo-tricia-keith-affordability/78520899007/

Blue Cross CEO weighs in on C-suite pay, push for affordability in wide-ranging interview
By JC Reindl - February 17, 2025

*   Keith acknowledged the difficult decision to restrict coverage of GLP-1 weight-loss drugs to diabetes patients only, citing high costs and short treatment durations.
*   She confirmed that Blue Cross currently has no plans to change its coverage policies on gender-affirming care for those diagnosed with gender dysphoria.

In a few weeks, Blue Cross Blue Shield of Michigan is expected to give its annual report on a big number: the compensation package of its top executive.

This disclosure happens every year in early March, and typically generates loud news headlines and snide comments on social media.

It's coming at an awkward time this year for new Blue Cross CEO Tricia Keith, even though the pay package number getting revealed — potentially $15 million or more — won't be hers, but rather that earned last year by her predecessor, Daniel Loepp, who retired Dec. 31 after nearly 20 years in the top job.

Blue Cross recently raised premiums on many group plans by 11.5% for 2025 — the biggest price jump in years — and gave voluntary buyout offers to its nonunionized workforce in an effort to cut $285 million in costs this year, or $600 million total over "several" years.

On the coverage front, Blue Cross on Jan. 1 stopped covering the popular and highly effective class of GLP-1 weight-loss drugs, including Mounjaro and Wegovy, for patients who only use them to lose weight. (Coverage for diabetes patients continues.) The insurer cited the drugs' high cost as part of the reason for this decision.

And nationwide, high-level insurance executives are still on edge over the Dec. 4 murder of UnitedHealthcare CEO Brian Thompson on a New York City street. In dark corners of the internet, some expressed more sympathy for the alleged assassin than the victim, and for weeks people used the incident to vent their own frustrations with health insurance companies and coverage denials.

Keith, 54, last week sat down with the Free Press in her office at The Blues' downtown Detroit headquarters for an interview about her new job and how the company is tackling the affordability crisis in health insurance.

Asked about multimillion-dollar executive pay at a time when affordability is such a concern for insurance customers, Keith admitted it's a lot.

“The compensation package that’s put together is a lot of money — I will be the first to admit that," Keith said. "But it comes with a great responsibility. When you think about the great responsibility that this company has in the state of Michigan and the responsibility it has in taking care of our members, that’s how the board decides to set that compensation.”

The first woman to ever lead Blue Cross Blue Shield of Michigan, Keith shared how the shocking murder of the UnitedHealthcare CEO affected her approach to the job of being the top executive at Michigan's largest health insurance company.

“I think it’s affected everybody in the industry," she said. "It’s tragic and there’s no excuse for what happened. I think, though, everybody in the industry is looking for answers to make sure that we hear, that we sift through the noise and we hear what consumers are telling us about their frustration.

“It really is about all of our employees — it’s not just about me. It’s about all of our employees and making sure that we have a safe and welcoming environment for them, because one of the things that is great about this job is our employees believe in our mission, and that’s why they come to work every day. So making sure that we’re creating the environment where they're also safe is really important.”

Ludington upbringing

Keith shared how in her own life, she didn't have health insurance coverage until age 22, "so I have a deep appreciation for what that means around access, around affordability."

She grew up in the small town of Ludington on the west side of Michigan and her parents were farmers. She is a 1989 graduate of Mason County Central High School and received her bachelor's degree from Central Michigan University in 1993 and a Master of Business Administration from Michigan State University in 2009.

She joined Blue Cross in 2006 and rose over time to a variety of different leadership roles. At the time last spring when she was tapped as the insurer's next CEO, she was working as executive vice president, chief operating officer and president of emerging markets.

“I am really excited to be in this job," Keith said. "It’s a great privilege and it’s a great responsibility because of the critical role that Blue Cross plays in Michigan and in everybody’s lives.”

"We’re really proud of the fact that 47 out of 100 people carry the Blue Cross card in Michigan," she added.

Concerned about consolidation

The recent double-digit price spikes on Blue Cross' insurance premiums are a result of various factors, according to Keith. They include a "dramatically increased" utilization of medical services by Michiganders since the COVID-19 pandemic, continued price escalation by the pharmaceutical industry and the impact of higher inflation in general.

Michigan faces challenging demographics as well, she said, with a population that is aging and only growing slowly.

In addition, the push by hospitals for more mergers and greater consolidation leads to upward pressure on health care prices — and ultimately the cost of health insurance.

Recent health system consolidations in Michigan include the Henry Ford Health-Ascension Michigan deal that closed last fall and involved 15 hospitals spanning metro Detroit, Flint and Jackson; the 2022 combination of Beaumont and Spectrum to form the 22-hospital Corewell Health, and the 2023 acquisition of Lansing-based Sparrow Health by University of Michigan Health, now Michigan Medicine.

Numerous studies have shown that consolidation in hospital markets leads to higher negotiated prices between hospitals and health insurance companies. That is because the enlarged hospital systems gain leverage in negotiations and can threaten to stop accepting certain insurances if they don't get paid the prices they want.

“We absolutely have concern around the consolidation," Keith said. "When you see trends from 2019 to 2024, of the big three hospitals in Michigan going from 31% to 64% (market share), obviously that is an area of concern."

She added, "So as long as we’re both in this toward a shared goal, toward affordability, we respect what they were trying to do in terms of their scale.”

Keith emphasized that Blue Cross, as a nonprofit mutual insurer, has operating margins of 1% or less each year, or below that of the typical medical provider or hospital system. In 2023, for instance, Blue Cross had a $544 million underwriting loss, and only by leaning on revenues from its subsidiary companies and investments did the insurer end the year in the black, with a 0.2% net gain.

For her, that slim margin underscores how Blue Cross has been pricing its insurance products to be as affordable as possible for the public.

Keith has said that the insurer's initiative to cut $600 million in administrative costs is also a response to those rising costs of pharmaceutical claims and medical provider prices, plus the higher post-COVID utilization of medical services by Michiganders.

Blue Cross employees reportedly had until Jan. 31 to take the initiative's voluntary buyout offer. Keith told the Free Press that they didn't have a target for how many people needed to take the buyout, but rather an amount of needed cost-savings.

“And we were delighted at the way our employees responded to that," she said of the offer. "We think that sets us on a really strong path toward meeting our objectives for the year and for the overall program.”

Asked whether there were enough volunteers to keep the buyout offer voluntary, Keith said, "we were very clear with our workforce in the beginning that this was the way that we hoped to get there, but what we need to do is get to our administrative goals. And so we’re going to evaluate as the program moves forward and see if there are other actions we need to take. But we’re committed to hitting our administrative goals."

'Very difficult decisions'

Asked if it was a tough decision to restrict the GLP-1 drugs to only those using them as a diabetes treatment, and no longer allowing them just for weight loss, Keith said:

"All those types of decisions are very difficult decisions, but if we go back to where we started, the pharmaceutical industry and their pricing is unregulated, and a $1,600 dollar-a-month charge for GLP-1s, when you spread that across the membership, those are the things that are driving pricing.

"And we felt it was a responsible thing to do to make that decision, so that we didn’t have to continue increasing prices across the board to everyone.”

What is more, she said, many patients weren't staying on the expensive drugs long enough for them to be most effective; most were stopping after only five months.

The gender treatments question

Hormone therapies and sex reassignment surgeries have become flashpoints in the culture wars in recent years, especially under the new Trump administration. President Donald Trump issued an executive order in late January to stop federally run insurance programs from paying for gender transitions for those under age 19. (The order has since been blocked by a federal judge.)

Locally, Corewell Health said this month that it would stop accepting new patients who are minors for hormone therapy regimens, such as puberty blockers. But days later, the health system reversed its decision.

Keith said she doesn't anticipate any changes right now to Blue Cross' coverage policies on gender treatments.

The Blues currently covers medical and surgical interventions for adults in Michigan who are diagnosed with gender dysphoria, meaning discomfort or distress resulting from a discrepancy between one's gender identity and the sex of one's physical body.

"We think it’s absolutely critical that we meet our members where they need us," Keith said. "And so when I go back to Blue Cross being integral and of a whole-person health, we want to make sure that we’re meeting the members where they are."

To further rein in costs, Blue Cross will next month start charging fees when some hospitals attempt repeated appeals of its claims denials. Specifically, if a third-party panel of physicians upholds the Blue Cross denial, the provider is then responsible for the administrative costs of that appeal. (If the panel sides with the provider, then Blue Cross pays the costs.)

According to Blue Cross, 85% of the panel's decisions last year upheld the company's denials.

"We hope enforcing this policy will reduce unnecessary appeals costs in the future," Blue Cross said in a statement.