Fast-rising costs for weight loss drugs helped drive record loss for Blue Cross Blue Shield of Massachusetts
Blue Cross chief financial officer Ruby Kam said the entire health insurance sector nationally is grappling with escalating medical costs, including from GLP-1 drugs. But while most national insurers reimburse for those drugs only when they're used to treat diabetes, Blue Cross and other Massachusetts insurers also cover their use to treat obesity.
The costs, which are projected to double again in 2025, will likely boost premiums for Blue Cross members even as the insurer works to hold down claims increases from hospitals and its own administrative costs, which make up about 10 percent of its revenue, Kam said.
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'Our premiums are not covering our expenses,' Kam said in an interview. 'We're looking at how to address this. Everything's on the table.'
Among other things, Kam said Blue Cross executives are weighing whether they can continue reimbursements for GLP-1 therapies prescribed to treat obesity. No decision has yet been made.
Massachusetts saw the country's third-highest increase in GLP-1 prescriptions for obese patients in 2024 compared to the prior year, driven in part by broad insurance coverage for the drugs here, the
Other health insurers in Massachusetts are also feeling the squeeze. Most of the state's health plans have been losing money for the past several quarters, said Lora Pellegrini, president of the Massachusetts Association of Health Plans, a trade group for the insurers.
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'We know from over two dozen state reports that provider prices and pharmaceutical prices are the key drivers of health care costs,' Pellegrini said. 'We have to have a serious conversation in the state about the prices being charged by the pharmaceutical industry.'
Blue Cross reported an overall net loss of $223.6 million last year on revenue of $9.7 billion, a 2.3 percent net loss margin. Its operating loss of $400.4 million, a 4.3 percent loss margin, was partly offset by investment income of $176.8 million. A year earlier, the insurer posted net income of $146.6 million, a 1.6 percent net loss margin.
In a message posted on the Blue Cross website Friday, chief executive Sarah Iselin, said the health care system faces multiple stresses from a shortage of primary care and mental health providers to rising costs from breakthrough medicines and medical procedures, creating affordability challenges for consumers and employers.
'Given the current environment, we don't expect the cost pressures to ease off any time soon,' Iselin wrote. 'So, in the coming year and beyond, we'll be taking an even more disciplined approach to become more efficient in the running of our business, while continuing to work aggressively and collaboratively to slow the growth in spending for medical and pharmacy services.'
Robert Weisman can be reached at
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