The nonprofit insurer reported its financial results for 2024 on Feb. 28. The company posted a -4.3% operating margin in 2024, compared to a 0.4% margin in 2023.
In a news release, CFO Ruby Kam said medical costs are rising at the fastest rate in more than a decade. Costs are rising across almost every category of services, but GLP-1 drugs have had the single largest impact, she said. GLP-1 drugs accounted for nearly 20% of the insurers’ pharmacy spending in 2024.
The insurer is repricing its plans to reflect higher costs and cutting administrative spending, including through hiring freezes and eliminating some jobs, according to the release.
In a statement, CEO Sarah Iselin said the company does not expect the trend to change any time soon.
“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,” she said.
Other Blue Cross Blue Shield insurers have reported losses as a result of climbing medical costs, especially for GLP-1 medications and other specialty drugs. In 2023, Blue Cross Blue Shield of Michigan reported a $544 million underwriting loss driven by rising medical costs. The company later dropped coverage of GLP-1 drugs for weight loss in its fully-insured commercial plans.