Blue Cross Blue Shield of Massachusetts, the state’s largest health insurer, reported a staggering operating loss of $400.4 million for 2024. This marks the biggest loss in the company’s history and a dramatic reversal from the previous year when it posted an operating income of $47.8 million. The insurer attributed the significant financial hit to the rapidly rising costs of medical care and prescription drugs for its members.
In particular, the popularity of expensive GLP-1 weight-loss medications has had the most substantial impact on the company’s bottom line. According to Chief Financial Officer Ruby Kam, the costs for five GLP-1 drugs—Ozempic, Mounjaro, Wegovy, Zepbound, and Saxenda—exceeded $300 million in 2024, more than double the amount spent in 2023. These medications now account for nearly 20% of Blue Cross’ total pharmacy spending.
To address these financial challenges, Blue Cross is taking several steps, including adjusting benefit plan prices to reflect the higher costs, working with healthcare providers to moderate service price growth, and seeking solutions to the significant impact of prescription drug expenses. The company is also tightly managing its administrative spending through measures such as a hiring freeze, job cuts, real estate consolidation, and renegotiating vendor contracts. Blue Cross is not alone in facing these financial pressures.
Record loss driven by drug costs
Point32Health, the parent company of Harvard Pilgrim Health Plan and Tufts Health Plan, also reported substantial operating losses of $382 million in 2024, up from $264 million the previous year. The company cited similar factors, including the high costs of GLP-1 weight-loss drugs.
The substantial losses underscore the skyrocketing healthcare costs that patients, employers, and insurers are grappling with in Massachusetts, particularly due to the rapid adoption of these blockbuster weight-loss drugs. The state has seen one of the highest increases in GLP-1 prescriptions for obese patients in the nation, driven in part by broad insurance coverage of the medications. As a result of these financial pressures, both Blue Cross and Point32Health have indicated that they will likely need to raise premiums for members and employers in the coming year.
They are also considering whether to continue covering GLP-1 therapies for obesity management, although no decisions have been made yet. The situation highlights the complex challenges facing the healthcare system as innovative but expensive new treatments become available. While these drugs offer significant medical benefits, their rapid adoption has put a strain on insurers’ finances, which were not anticipated in their initial pricing models.
As Paul Hattis, a senior fellow at the Lown Institute healthcare think tank, noted, “The cost burden is real.” Insurers, healthcare providers, and policymakers will need to work together to find solutions that balance access to these beneficial treatments with the long-term sustainability of the healthcare system.