NEWS RELEASE
Blue Cross Blue Shield of Michigan Reports Significantly Improved Financial Results for 2025 Despite Ongoing Health Care and Drug Cost Pressures
Andrew Hetzel
| 6 min read
DETROIT, March 2, 2026 — In a time of continuing, rapidly rising medical and prescription drug claims expenses, Blue Cross Blue Shield of Michigan managed significantly improved financial performance in 2025 compared to 2024.The improvement was due to the company transforming its business internally, including an administrative cost reduction of $420 million, and pricing actions. The company also made concerted efforts toward identifying new solutions, technologies and efficiencies, all in an effort to control rising costs and make health care more affordable for members and group customers.
Facing the escalating health care cost pressures that have been impacting health insurers nationally, Blue Cross made substantial progress in controlling costs. However, the company and its customers remain in the midst of a health care affordability crisis. Blue Cross paid $2.6 billion more for medical and pharmacy services for its members in 2025 than it did the year prior, driving a loss of $246 million on enterprise revenue of $43.3 billion for the year ending Dec. 31, 2025.These cost pressures are the result of continued escalation of utilization of expensive medical services and the unregulated high prices of prescription drugs.
Blue Cross experienced an underwriting loss of $975.5 million on its core lines of business in 2025, resulting in a negative operating margin of -2.3% for the year. That compares to a -4.2% operating margin in 2024.Losses were partly offset by strong performance from the nonprofit company’s investment portfolio. The company’s audited financial statements, prepared under Generally Accepted Accounting Principles (GAAP), will be included in its annual report that will be published in May.
“Over the past several years, health insurers have faced significant financial pressures due to dramatically rising medical and prescription drug prices,” said Tricia A. Keith, president & CEO of Blue Cross Blue Shield of Michigan. “We are concerned about the impact rising costs have on our members and group customers. We worked diligently in 2025 to develop solutions and lower our administrative costs to help manage and control rising costs. We will keep pursuing additional solutions in the year ahead as we work toward improved affordability.”
$2.6 BILLION INCREASE IN YEAR-OVER-YEAR CLAIMS EXPENSES
In 2025, Blue Cross experienced an increase of $2.6 billion over 2024 in combined medical and pharmacy claims expenses. Of that total, medical claims rose by $2.4 billion and were driven by increased spending across all service types, with higher trends observed in surgery, emergency room and observation, and professional services. Blue Cross also experienced a significant increase in both inpatient and post-acute care utilization in 2025. Underlying these medical trends is an increase in the use of higher-cost, complex treatment for conditions within a population, continuing to place pressure on upstream health care costs.
“Blue Cross and our subsidiaries paid an average of $107 million per day for the care and benefits of our members in Michigan and across the nation in 2025,” Keith said. “Paying for care is core to our mission, but we need to also focus on the cost of care – and we can’t do that alone. More than 90 percent of every health insurance dollar is spent on hospital care, physician care and prescription drugs. The affordability concerns of our members and employer customers can only be successfully addressed by all of us working together to make health care services less costly and help patients be as healthy as possible.”
The company experienced an increase of $200 million in 2025 pharmacy claims costs.
Blue Cross implemented targeted pharmacy solutions that successfully held commercial pharmacy spending relatively flat in 2025, helping protect affordability for members and employers. These initiatives included the transition to biosimilars for the high-cost drugs Humira and Stelara.The biosimilars, on average, cost 90% less than the brand name alternatives.
“Blue Cross serves as a steward of our members and customers’ health care dollars and we’ve been laser focused on managing through rising health care costs while maintaining access for our members,” Keith said. “There is still much work to do in addressing rising costs, but we can’t do this work alone. We must work together across the health care ecosystem to reach meaningful results that will have a real impact on members’ pocketbooks and employer customer budgets.”
PERFORMANCE BY INVESTMENTS
Offsetting the unfavorable health underwriting results was Blue Cross’s conservatively invested portfolio of stocks and bonds, which generated a positive return of $641 million on a GAAP basis.
MEMBERSHIP
Blue Cross maintained relatively stable health insurance membership in 2025, despite rising cost pressures. Total nationwide health insurance membership decreased by only 3,600 members in 2025, out of more than 5.1 million, a testament to the confidence both employer groups and members have in Blue Cross’s ability to provide access to high quality care.
Total Health Insurance Membership - Total nationwide health insurance membership at 2025 year-end was 5,143,961, a decrease of a tenth of a percent (approximately 3,600 members).
Medicare Advantage Membership – Medicare Advantage membership grew in 2025 by 25,245 members, for a total of 688,517 across both group and individual plans.
ACA Individual Market Membership – BCBSM’s membership in individual plans increased by 17,894 members, for a total of 178,175 members.
Medicaid Membership – Blue Cross Complete of Michigan membership increased by 7,000 members in 2025. BCC is the second largest Michigan Medicaid plan in the state with 293,977 members.
Small Group Membership – Small group membership decreased slightly from 2024 by approximately 7,000 members. Blue Cross continues to cover more members in Michigan small groups (under 50 employees) than any other health plan, providing benefits to 275,485 members in 2025.
GIVING BACK TO MICHIGAN
In April 2026, BCBSM will continue its ongoing commitment to Michigan residents by paying $100 million to the Michigan Health Endowment Fund. At that time, the company will have paid more than $1.11 billion over the past 13 years to enable the fund to fulfill its mission of improving the health and wellness of Michigan residents while reducing health care costs.
TAXES
As a nonprofit mutual, BCBSM paid $100 million in taxes to federal, state, and local governments in 2025.
STATUTORY FILING INFORMATION
BCBSM also will file a financial statement with the State of Michigan that is based on Statutory Accounting Principles (SAP). This accounting method is parent-company only and does not include subsidiaries. It also has other differences from GAAP accounting. It is required by state regulators but does not represent a comprehensive consolidated view of Blue Cross’s enterprise financial performance as a nonprofit mutual. Under SAP accounting, Blue Cross posted a $193 million underwriting loss on SAP revenue of $4.4 billion in 2025. Under Statutory Accounting rules BCBSM’s Risk Based Capital was at 476% in 2025.
CREDIT RATING
AM Best, a nationally recognized rating agency that evaluates an insurer’s ability to meet its ongoing obligations to policyholders, re-affirmed Blue Cross’s financial rating of “A (Excellent) Negative” in 2025.The continued recognition as “Excellent” communicates that the company is here for the long term, one that members and group customers can count on to be ready to help serve and provide exceptional access to the health care services they need, where and when they need them.
Blue Cross Blue Shield of Michigan, a nonprofit mutual insurance company, is an independent licensee of the Blue Cross and Blue Shield Association. BCBSM provides health benefits to more than 4.7 million members residing in Michigan in addition to employees of Michigan-headquartered companies residing outside the state. The company has been committed to delivering affordable health care products through a broad variety of plans for businesses, individuals and seniors for over 80 years. Beyond health care coverage, BCBSM supports impactful community initiatives and provides leadership in improving health care. For more information, visit bcbsm.com and MiBlueDaily.com.
