Blue Cross Blue Shield of Michigan offering employee buyouts after ‘significant economic headwinds’

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    Blue Cross Blue Shield of Michigan is offering some employees, including 700 eligible to retire this year, a buyout option.
    
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    The insurer said it wants to reduce administrative costs by $600 million over the next several years.
    
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    BCBS of Michigan says it has lost more than $1 billion on its core health insurance business in two years
    

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  Blue Cross Blue Shield of Michigan is offering some employees, including 700 eligible to retire this year, a buyout option.
  
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  The insurer said it wants to reduce administrative costs by $600 million over the next several years.
  
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  BCBS of Michigan says it has lost more than $1 billion on its core health insurance business in two years
  

DETROIT (FOX 2):In an attempt to reduce expenses, Blue Cross Blue Shield, a health insurance company, is giving buyouts to certain employees.

We know:

A BCBS statement states that 700 employees who will be eligible to retire this year are among the staff for whom a Voluntary Separation Offer period is being made available. According to the corporation, qualified non-bargaining unit workers will get financial compensation for agreeing to the buyout.

The business claimed that it will be able to save money and administrative expenses by letting go of some staff.

The company has lost more than $1 billion on its main health insurance business in just two years, BCBS said, citing “dramatically increased medical utilization and skyrocketing prices for prescription and specialty drugs” as the reason for the need to lower costs.

Over the next few years, the insurer plans to cut administrative expenses by $600 million.

What they’re saying:

A comprehensive statement regarding the offer was issued by Blue Cross Blue Shield of Michigan:

“Blue Cross Blue Shield of Michigan has withstanded major economic challenges during the last three years that have affected almost all health insurers, such as sharply rising medical utilization and soaring prescription and specialty drug costs. Our capacity to continue offering reasonably priced health coverage is currently being severely impacted by the more than $1 billion our company has lost in the last two years on our core health insurance business.

Since we are a nonprofit cooperative health insurer, it is imperative that we carefully manage our finances while prioritizing the needs of our members and customers. We have an obligation to examine ourselves and take action to reduce our own expenses as we now impose double-digit premium hikes on our fully-insured clients to offset the increased expenses we are facing.

“Over a number of years, our organization hopes to cut administrative expenses by $600 million, and we’ll be taking action to cut expenses everywhere. We are starting a Voluntary Separation Offer period that will terminate at the end of the month in order to help our company continue to control expenses and support staff members who are deciding whether now is the right time to retire or seek other possibilities. This provides a monetary incentive for qualified non-bargaining unit workers who want to think about leaving their jobs, including over 700 who will be eligible for retirement in 2025. This will lessen how the rest of our personnel is affected by administrative expense reductions.

“The cornerstone of our success will remain talent. Blue Cross’s reputation as a wonderful place to work and build a career is demonstrated by the high percentage of our workforce that is eligible for retirement. Our company and staff are dedicated to doing everything in our power to mitigate the negative effects of rising costs on our members and customers during these difficult economic times for health care organizations. The VSO is one way we can support them while also paying tribute to our long-serving staff.

What is unknown to us:

The number of employees who will be offered the buyout option is unknown.

Additionally, Blue Cross did not disclose the amount of money provided to employees in exchange for accepting the buyout.

The Source: Blue Cross Blue Shield of Michigan provided the information for this story in a statement.