Higher use of medical services and prescription drugs, rather than rising inflation-adjusted prices, drove a recent uptick in commercial spending at Blue Cross Blue Shield of Massachusetts, according to a study published Oct. 5 in Health Affairs.
The analysis was conducted by researchers from Harvard University, along with senior leadership from BCBSMA, including its chief actuary.
The researchers used the insurer’s commercial claims from 2018 through June 2025, covering fully insured, self-insured and ACA marketplace members who live in Massachusetts. The sample included 1.8 million to 2 million members with medical coverage and 1.2 million to 1.4 million with pharmacy coverage through the insurer.
BCBSMA reported a $400 million operating loss in 2024, with executives naming GLP-1 drugs as the single largest factor. In 2025, the company posted a nearly $381 million operating loss and made the decision to drop GLP-1 coverage for weight loss, similar to many health plans across the industry.
Five study notes:
1. Per-member monthly spending rose 11.8% in the 12 months ending June 2025, up from 6.8% the prior year and 1.2% in 2019. After inflation, spending grew 9.2%, compared with a 0.9% decline in 2019.
2. Medical spending accounted for about two-thirds of that growth, or 5.8 of the 9.2 percentage points. Most of it came from higher utilization, which contributed 4.1 points. Inflation-adjusted price growth contributed 1.1 points and service mix 0.5 points. Prices for medical services rose 1.3% after inflation, while utilization grew 4.8%.
3. Retail prescription drug spending grew 18.8% after inflation, up from 1.7% in 2019, and contributed the remaining 3.4 points of overall growth. GLP-1 spending rose 83.7% from a relatively small base, compared with 9.6% for all other retail drugs. GLP-1s contributed 1.7 points to overall spending growth, the same as every other retail drug combined. The insurer’s pharmacy team told researchers that drug prices showed little growth after inflation and that GLP-1 net prices were falling. Nearly all retail drug growth came from more prescriptions and a shift toward higher-priced drugs, including new launches.
4. Spending on covered drugs rose 68%, from $32 per member per month in 2019 to $54 in the 12 months ending June 2025, which the pharmacy team attributed largely to high-cost chemotherapy and specialized treatments for conditions such as multiple sclerosis and Crohn’s disease. Counting retail and medical-benefit drugs together, prescription drugs accounted for nearly 30% of total spending growth in that period.
5. The authors also found signs that more intense coding may be contributing to the rise in spending. Septicemia admissions rose from 1.7% of inpatient medical admissions in 2019 to 2.5%. Office visits billed at the two highest complexity levels rose from 29.1% to 35.2%, and emergency department visits at those levels rose from 52% to 58%. The researchers could not measure the total effect or say whether the coding corrects past inaccuracies.
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