BCBS Michigan turns to employee buyouts to cut costs

Blue Cross Blue Shield of Michigan is offering buyouts to employees as it targets hundreds of millions of dollars in administrative cuts, the Detroit Free Press reported Jan. 21. 

The Detroit-based insurer is planning to cut $600 million in administrative expenses over several years, the company said in a statement shared with Becker's. BCBS Michigan has lost more than $1 billion within its core insurance business over the past two years, the company said. 

"Over the past three years, Blue Cross Blue Shield of Michigan has weathered significant economic headwinds affecting virtually all health insurers — including dramatically increased medical utilization and skyrocketing prices for prescription and specialty drugs," the statement said. 

Nonunion employees have until Jan. 31 to accept a voluntary buyout, the company said. The offer includes more than 700 employees who are retirement eligible in 2025. 

"As a nonprofit mutual health insurer, we must manage our finances responsibly, with the interests of our customers and members front and center," BCBS Michigan said in the statement. "As we take double-digit premium increases out to our fully insured customers now to account for the higher costs we are experiencing, we have a responsibility to look inward and take steps to lower our own costs." 

BCBS Michigan has employed other cost cutting measures over the past year. In June, the insurer said it would no longer cover GLP-1 drugs for weight loss in its large group commercial plans. The company also laid off 64 employees in August. 

In a memo to employees obtained by the Free Press, BCBS Michigan CEO Tricia Keith wrote that "additional employment actions may be needed" if the buyout offer does not "right-size the organization to the level that aligns with our financial target." 

Ms. Keith assumed the CEO role at the beginning of January after longtime CEO Daniel Loepp retired. 




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