By Tricia A. Keith, President and CEO, Blue Cross Blue Shield of Michigan
Each year at the Mackinac Policy Conference, business and government leaders across Michigan come together to talk about the state’s biggest challenges and how to find solutions and move forward together.
This year, healthcare affordability should be at the top of their list. For most people, health care is much more than a policy debate — it’s a kitchen table issue that drives some often-difficult personal decisions. It shows up at the pharmacy counter. In the monthly budget. When someone puts off care because they are worried about the bill that will follow. Employers feel it too, as they work to offer good coverage while managing rising costs. Health care affordability is putting real pressure on families, businesses and communities across our state.
The Health Care Cost Equation
That’s why Blue Cross Blue Shield of Michigan is speaking more plainly about what’s driving healthcare costs and what it will take to contain them. Families and employers deserve a better explanation about why coverage keeps getting harder to afford.
The biggest driver is the cost of care itself, which has been rising for years, far faster than everyday expenses. Since 2000, overall inflation has increased about 93%. Over that same period, the price of medical services rose roughly 150% and hospital prices surged by more than 280% — three times inflation.
Prescription drugs are adding even more pressure. In 2024, the median list price for a new specialty drug topped $370,000, about double what it was just three years earlier. That kind of growth pushes up costs across the system and makes coverage harder to sustain.
At Blue Cross, we see that pressure every day. In 2023, Blue Cross Blue Shield of Michigan paid $88 million a day in claims for its 5 million members. In 2024, that rose to $100 million a day. In 2025, it climbed again to about $107 million a day.
When costs rise upstream, they show up downstream in the premiums and budgets of families and employers across Michigan. In 2024, Blue Cross Blue Shield of Michigan paid $1.04 in benefits for every $1 collected in premiums. In 2025, we brought that down to $1.02, through pharmacy initiatives and administrative cost reductions. That’s progress. But it’s still unsustainable.
From Symptoms to Solutions
We know the health care system works best when we all work together to find solutions. Providers, drug companies, employers, policymakers and health plans all have a role. There is good work underway, but not at the pace this moment demands.
At Blue Cross Blue Shield of Michigan, we’re focused on steps that can help contain costs and improve outcomes. In the past year, we signed eight new contracts with hospital systems that include value-based care components. These arrangements are built to pay for better outcomes, not simply more care, and we’re hopeful more health systems will join us in the fight for affordability.
We’re also working to expand access to generic and biosimilar drugs that can deliver the same clinical benefit at more sustainable prices. In 2025, our biosimilar program saved $80 million in 2025 by switching high-priced biologics to alternatives that cut list-price costs by about 90%. And 99% of members stayed on therapy.
We also have to control our own costs. In 2025, we cut administrative expenses by more than $420 million toward a multi-year target of $600 million. We also continue to invest in technology that increases efficiency and makes care simpler for members, customers and providers.
Partnership Drives Progress
None of us want a future where healthcare costs keep outpacing paychecks and squeezing business’ budgets year after year. Mackinac Island creates space for candid conversations about what is driving those costs and what must change. But these conversations are bigger than a conference. We need to continue to work together to find solutions to the health care cost equation, and to make healthcare more affordable and accessible for everyone.
Blue Cross Blue Shield of Michigan is proud to support this year’s Mackinac Policy Conference as a diamond sponsor. We’ll be there to help move the conversation toward solutions that improve affordability. Michigan families and employers need action more than ever.
Tricia A. Keith is president and CEO of Blue Cross Blue Shield of Michigan. For more information on healthcare affordability and the solutions BCBSM is working toward, visit www.mibluedaily.com/affordability.
