Michigan Medicine will shutter its health plan, U-M Health Plan, at the end of 2025.
The health plan has experienced "significant financial losses" over the past few years, the health system wrote in a Nov. 25 message to members.
Ann Arbor-based Michigan Medicine acquired the health plan, formerly named Physicians Health Plan, when it purchased Sparrow Health, the Lansing State Journal reported Nov. 29.
The University of Michigan acquired Lansing, Mich.-based Sparrow Health System in 2023. Saginaw, Mich.-based Covenant Health continues to own a 10% stake in U-M Health Plan, the Journal reported. The health plan has around 64,000 members.
The plan will continue to pay claims through the end of 2025, according to its message to members.
"Despite significant efforts to maintain the plan, the increasingly competitive health insurance landscape and CMS changes to Medicare Advantage plans have made it unsustainable to continue offering the high level of service our members deserve," a spokesperson for U-M Health told the Journal.
U-M Health Plan has around 9,000 Medicare Advantage members, per CMS data.
Several other health systems have sold their health plans to other companies or closed their insurance arms in the past year.
The closure comes as Michigan Medicine is negotiating a new contract with the union representing nurses at U-M Health Sparrow. Many of the employees rely on the health plan, Jeff Breslin, RN, president of the union said in a Nov. 27 news release.
"To drop this bomb on healthcare workers during negotiations — to take away coverage of the very care we provide without a solid option — is just unacceptable," Mr. Breslin said.
The union will hold a strike authorization vote beginning Dec. 4.