RELEASE
Surging Use of Expensive Health Care Services Weighs Heavily Upon 2024 Financial Performance of Blue Cross Blue Shield of Michigan
Meghan O'Brien
| 6 min read
DETROIT, March 3, 2025 — Blue Cross Blue Shield of Michigan paid $3 billion more for medical and pharmacy services for its members in 2024 than it did the year prior, driving a loss of $1.02 billion on enterprise revenue of $40.6 billion for the year ending Dec. 31, 2024. Similar cost increases are being reported across the health insurance sector nationally – driven by significantly escalated patient utilization of expensive medical services and skyrocketing costs for prescription and specialty drugs.
“Health insurers are facing significant economic headwinds – especially nonprofit carriers like us – that are jeopardizing the affordability of health insurance for employers and families across the country,” said Tricia A. Keith, president & CEO of Blue Cross Blue Shield of Michigan. “In Michigan, Blue Cross is working diligently to manage the dramatically increasing cost and use of health care services. But we can’t do this work alone. Collaborating with partners across the health care ecosystem is essential to identifying solutions to maintain health care affordability for our members and group customers.”
Within its core health insurance business, Blue Cross experienced an underwriting loss of $1.7 billion in 2024, driven by the fast-growing price and use of health care services, resulting in a negative operating margin of -4.2% for the year. These losses were partly offset by strong performance from the nonprofit company’s investment portfolio. The company’s audited financial statements, prepared under Generally Accepted Accounting Principles (GAAP), will be included in its annual report that will be published in May.
Blue Cross and its subsidiaries paid an average of $100 million per day for the care and benefits of members in Michigan – where Blue Cross maintains a 46% market share – and around the nation in 2024. This is $12 million more per day than 2023. In 2024, Blue Cross experienced an increase of $3 billion over 2023 in medical and pharmacy claims costs. Medical claims increases were driven by increased utilization of inpatient acute care and surgery, outpatient surgery, emergency room visits, medical drugs, behavioral health, and professional services, resulting in an increase of $2.1 billion over 2023. Additionally, the company experienced an increase of $900 million in pharmacy claims costs, including $544 million for specialty drugs, of which $215 million was attributed to utilization for new indications on autoimmune drugs.GLP-1 drugs alone, used for diabetic therapy and weight management, produced $1.1 billion in claims in 2024, more than a 29% increase from 2023.
“Last year Blue Cross paid out $100 million per day in health care for our members — that’s why we’re here,” Keith said. “It’s good for our members that they are receiving the care they need and we’re proud to be a vital part in supporting the health care ecosystem. The problem is the cost of the system itself, and the downstream impact on health insurance affordability for our members in the future. Blue Cross has a strong financial backbone to support our customers and members – but we must do more to manage the upstream costs of the health care system, as well as continuing to improve the health of our members.”
PERFORMANCE BY INVESTMENTS AND SUBSIDIARIES
Offsetting the unfavorable health underwriting results was Blue Cross’s conservatively invested portfolio of stocks and bonds, which generated a positive return of $671 million on a GAAP basis. AF Group, Blue Cross’s wholly owned specialty insurance subsidiary, contributed $204 million to enterprise results including investment returns reported in the consolidated financial statements. As a nonprofit mutual insurer, Blue Cross operates AF Group under Emergent Holdings Inc., which supports the organization’s core health insurance business through profitability in other insurance market sectors. Favorable performance by Blue Cross’s non-health lines of business enables the company to moderate health insurance pricing in effort to maintain affordability.
MEMBERSHIP
Blue Cross’s total nationwide health insurance membership decreased by approximately 64,000 members in 2024, primarily driven by expected losses in the Medicaid market.
- Total Health Insurance Membership – Total nationwide health insurance membership at 2024 year-end was 5,140,341, a decrease of about one and a half percent (approximately 64,000 members).
- Medicare Advantage Membership – Medicare Advantage membership grew in 2024 by 28,178 members, for a total of 663,272 across both group and individual plans.
- ACA Individual Market Membership – BCBSM’s membership in individual plans increased by 6,345 members year-over-year, to a total of 160,281 members in January 2025 following the annual open enrollment period.
- Medicaid Membership – Blue Cross Complete of Michigan membership decreased by 41,894 members in 2024 due to the termination of the Public Health Emergency declaration and continued redeterminations. BCC remains the third-largest Michigan Medicaid plan in the state with 286,468 members.
- Small Group Membership – Small group membership increased slightly over 2023 by 263 members. Blue Cross continues to cover more members in Michigan small groups (under 50 employees) than any other health plan, providing benefits to 282,452 members in 2024.
In April 2025, BCBSM will continue its ongoing commitment to Michigan residents by paying $100 million to the Michigan Health Endowment Fund. At that time, the company will have paid more than $1 billion over the past 12 years to enable the fund to fulfill its mission in supporting the most vulnerable residents in the state.
As a nonprofit mutual, BCBSM paid more than $165 million in taxes to federal, state, and local governments in 2024.
STATUTORY FILING INFORMATION
BCBSM also will file a financial statement with the State of Michigan that is based on Statutory Accounting Principles (SAP). This accounting method is parent-company only and does not include subsidiaries. It also has other differences from GAAP accounting. It is required by state regulators but does not represent a comprehensive consolidated view of Blue Cross’s enterprise financial performance as a nonprofit mutual. Under SAP accounting, Blue Cross posted a $817 million underwriting loss on SAP revenue of $6.8 billion in 2024. Under Statutory Accounting rules BCBSM’s Risk Based Capital was at 498% in 2024.
Blue Cross Blue Shield of Michigan, a nonprofit mutual insurance company, is an independent licensee of the Blue Cross and Blue Shield Association. BCBSM provides health benefits to more than 4.7 million members residing in Michigan in addition to employees of Michigan-headquartered companies residing outside the state. The company has been committed to delivering affordable health care products through a broad variety of plans for businesses, individuals and seniors for over 80 years. Beyond health care coverage, BCBSM supports impactful community initiatives and provides leadership in improving health care. For more information, visit bcbsm.com and MiBlueDaily.com.
