By Tricia A. Keith, Guest Columnist
At Blue Cross Blue Shield of Michigan, we understand that affordability is one of the most urgent challenges facing our members, customers and communities. Health care costs are rising too quickly, straining working families, small businesses and insurers alike. That’s why we are diligently working to promote affordability across every part of our business — from modernizing operations to reimagining how care is paid for and delivered across the health care ecosystem.
There’s an urgent need to address these issues now — for hospitals, providers, payers and the people and small businesses that pay for health care. Affordability can’t wait.
Costs are rising at a pace that puts pressure on every part of the health care economy. In 2024 alone, Blue Cross and our subsidiaries paid an average of $100 million per day to cover the care and benefits of our members in Michigan and across the country. That’s why we’re here. But it’s also $12 million more per day than in 2023 and $20 million more per day than just two years ago. These costs are driven largely by steeply rising medical and pharmacy claims. Last year, medical claims rose 7.7% and pharmacy claims jumped 14.6%, far outpacing the general inflation rate of 2.9%, according to the U.S. Bureau of Labor Statistics.
As a result, Blue Cross experienced a $1.7 billion underwriting loss in 2024, an unsustainable outcome for any business. Despite that financial strain, we have a strong foundation built on healthy reserves, smart investments, diversified revenue sources and the trust of millions of Michiganians. This allows us to remain a stable, mission-driven organization whose focus never wavers: protecting our members and strengthening the health care system for the long term.
Blue Cross is doing everything we can to absorb as much of the pressure of affordability as possible, including looking internally at our own operations. Our administrative costs account for just 9 cents of every health care dollar, and we’re working to bring that number even lower. We have committed to reducing $285 million in administrative costs in 2025 and a total of $600 million over three years — tangible steps that reflect our pledge to ease financial pressure on members while strengthening the health system overall. But we can’t do it alone. We need to work with our partners across the health system to make care more affordable.
Mackinac Policy Conference: A Call for Action
This conversation supports the tenor of discussions at this year’s Mackinac Policy Conference (May 27-30), where the theme is “The Equation for Impact: (Vision + Tools) x Action = Impact.” It’s a call to move from intention to innovation. At Blue Cross, we’re answering that call, taking measurable steps to drive down costs and bring greater value to the people we serve.
Our vision as a nonprofit mutual company is to keep health care accessible, effective and financially sustainable for all Michigan residents. That means we answer to our members, not shareholders. And it means we must operate differently — faster, leaner and more focused on value.
We’re also working with others across the health care landscape to develop the tools, programs and resources that improve quality, efficiency and affordability.
Through our Value Partnerships program, we’ve built strong, lasting collaborations with more than 20,000 physicians and 100 hospitals. These partnerships have reduced health care costs — saving $6.3 billion since 2005 because repeated tests were avoided, complications and errors were reduced, ER visits and hospital stays were prevented, and care was coordinated.
We’re also using advanced analytics and data sharing to help providers close gaps in care, improve coordination and deliver more proactive care. For example, we’re using machine learning and predictive modeling to identify health problems early, which results in earlier care and lower costs for patients and members alike.
And we’re taking action. We’re not only imagining a better system — we’re building one. Every operational decision, every partnership and every dollar we invest is aligned to deliver value for our members.
That’s why we’ve made the tough choice to reduce internal costs; and that’s why we support programs that reduce health disparities, expand behavioral health access and keep maternal health at the forefront.
And through our community partnerships, we’re supporting solutions that help people stay healthier and avoid preventable, high-cost care settings.
Impact: Leading Michigan Forward
At this year’s Mackinac Policy Conference, Blue Cross Blue Shield of Michigan is proud to serve as the diamond sponsor, supporting the conversations and the collaborations that will lead our state forward.
Before joining Blue Cross nearly 20 years ago, I spent several years working in the Michigan Legislature. One of the most powerful lessons I learned during that time came from building partnerships across stakeholders to create change: great things can happen when interests align.
Like the conference theme this year, the health care affordability equation is complex, but we all share the same interest — the health of our citizens. It will take working together across the health care ecosystem — including hospitals, providers, pharmaceutical companies and the public — to find solutions. With the right vision and bold action, we’re confident that we can create real, measurable impact for Michigan, and affordable, sustainable health care for Michiganians.
Tricia A. Keith is president and CEO of Blue Cross Blue Shield of Michigan. For more information about health care affordability, visit www.mibluedaily.com/affordability.
About Post Author
