BCBS officials said the cost cuts could lead to layoffs and staff reductions.
The health insurer has seen a rise in expenses over the last several years, which it attributes to BCBS of Michigan’s growing administrative field. A BCBS document said the insurer has “experienced faster admin cost growth and lower membership gains than national, for-profit plans” since 2010. The document also claimed BCBS of Michigan’s administrative costs are “20 percent to 30 percent higher than local competitors in the commercial business.”
Numerous sources have said BCBS of Michigan’s decision to cut costs is influenced by repeated requests by the insurer’s clients for more affordable prices. “When we are in the room with our customers, this is what we hear: ‘Our employees prefer Blue Cross, but you need to help us offer it affordably,'” said Andy Hetzel, BCBS’ vice president of corporate communications. “We are not going to wait and be outflanked by our competitors.”
Mr. Hetzel added that BCBS of Michigan is conducting an ongoing review of operations, which it has performed on a regular basis since 2006.
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