BCBS Michigan sees narrow net gain amid 'massive' medical costs

Blue Cross Blue Shield of Michigan reported a $3.2 billion increase in medical costs in 2023. 

According to a March 1 news release from the Detroit-based insurer, BCBS Michigan had a net income of $100 million in 2023, 0.2% of the company's total revenue, up from a $777 million loss in 2022. 

The company reported a $544 million underwriting loss driven by increasing medical costs. The loss was offset by income in investments and profits from the insurer's subsidiaries. 

In a March 1 news release, the company described "massive increases" in medical costs. CEO Daniel Loepp said the company managed a positive margin despite "extraordinary pressures." 

"The healthcare economy, in Michigan and nationally, is experiencing an extreme wave of cost pressures brought on by surging utilization and skyrocketing demand for high-cost pharmaceuticals," Mr. Loepp said. 

Mr. Loepp saw a small pay cut in 2023. He was paid $15.7 million in 2023, down $1.2 million from 2022, the Detroit Free-Press reported March 1. 

Here are five things to note about the insurer's finances in 2023: 

  1. The insurer reported $36.3 billion in revenue in 2023, up 11% year-over-year from $32.8 billion in 2022. 
  2. In 2023, the company paid out $8 million more in claims on average each day than in 2022. 
  3. Costs for medical services increased $1.4 billion over 2022, according to BCBS Michigan. Pharmaceutical costs increased by $1.8 billion, including a $750 million increase in specialty drug costs and a $350 million increase in GLP-1 drug costs. 
  4. The insurer's total membership was 5.2 million at the end of 2023, up slightly from 2022. 
  5. Much of BCBS Michigan's membership growth was driven by Medicare Advantage, where it added over 15,000 members in 2023. 

Read more here. 

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