Blue Cross/Blue Shield of Michigan reports losing more than $ 1.35 billion in their health insurance core business over their last two reported fiscal years: about 4.5% of premiums earned in FY2022 and 2.6% of premiums earned in FY2023. They have not reported FY2024 results yet and there is no clear indication as to whether they are better or worse than the preceding two years'.
BC/BSM just announced retirement incentives to more than 700 of their employees. Chosen employees have until the end of January to accept those incentives. BC/BS management has not indicated what will happen if the offer is under- or oversubscribed. This action is part of new President and CEO Tricia A. Keith's - not yet fully disclosed - Blue Cross Accelerated plan, which seeks to cut $600 million in administrative costs. Somehow, this seems inadequate to offset the huge losses that BC/BSM is running. So they are probably going to massively increase premiums (which require DIFS approval) or go bust.
Blue Cross/Blue Shield of Michigan provides health insurance coverage to about half of all Michiganders.
Blue Cross Blue Shield of Michigan offering employee buyouts
Candice Williams - January 21, 2025Blue Cross Blue Shield of Michigan is offering buyouts to eligible employees as it copes with financial strain from rising prescription drug prices.
Nonunion employees have until the end of the month to accept a voluntary separation offer. The initiative is part of the company’s plan to slash $600 million in administrative costs during the next several years.
In a statement emailed from company spokeswoman Meghan K. O'Brien, BCBSM said: "Our company has lost more than $1 billion on our core health insurance business in two years, and these costs are now weighing heavily upon our ability to continue providing affordable health coverage. As a nonprofit mutual health insurer, we must manage our finances responsibly, with the interests of our customers and members front-and-center. As we take double-digit premium increases out to our fully-insured customers now to account for the higher costs we are experiencing, we have a responsibility to look inward and take steps to lower our own costs."
The company said that its voluntary separation offer will help it continue to manage costs and assist employees who are considering retirement or other opportunities.
"This offers a financial incentive for eligible non-bargaining unit employees, including more than 700 who will be retirement eligible in 2025, who wish to consider stepping away from employment," the statement read. "This will help reduce the impact of administrative cost reductions on the rest of our workforce."
During its most recent annual financials briefing in March, BCBSM reported an underwriting loss of $544 million in 2023 as the insurer experienced an increase in medical and pharmacy claims and costs, including popular medications used for weight loss and diabetes. BCBSM experienced an increase of $1.8 billion in pharmacy claims and a $1.4 million [typo: "million" should be "billion"] increase claims costs for medical services in 2023, officials said.
Sign Up for MHF Insights to keep up on the latest in Michigan Health Policy
