DETROIT, Mich. — Blue Cross Blue Shield of Michigan is offering employee buyouts as the insurance company looks to reduce administrative costs.
According to the Blue Cross, the company has opened a Voluntary Separation Offer period that offers a financial incentive to non-union employees, including more than 700 employees who are eligible for retirement in 2025. Employees have until the end of January to accept the offer.
The buyouts are part of the insurer’s plan to reduce administrative costs by $600 million over the next several years. The company says it’s lost more than $1 billion on “core health insurance business in two years” and cites increasing costs of prescription and specialty drugs as a reason for trimming costs.
Blue Cross released the following statement regarding its employee buyout offer:
“Over the past three years, Blue Cross Blue Shield of Michigan has weathered significant economic headwinds affecting virtually all health insurers – including dramatically increased medical utilization and skyrocketing prices for prescription and specialty drugs. Our company has lost more than $1 billion on our core health insurance business in two years, and these costs are now weighing heavily upon our ability to continue providing affordable health coverage.
“As a nonprofit mutual health insurer, we must manage our finances responsibly, with the interests of our customers and members front-and-center. As we take double-digit premium increases out to our fully-insured customers now to account for the higher costs we are experiencing, we have a responsibility to look inward and take steps to lower our own costs.
“Our company is looking to reduce administrative costs by $600 million over several years – and we will be taking steps to reduce spending across the board. To help our business continue to manage costs and assist employees who are considering whether now may be the time to retire or pursue other opportunities, we are opening a Voluntary Separation Offer period that will conclude at the end of the month. This offers a financial incentive for eligible non-bargaining unit employees, including more than 700 who will be retirement eligible in 2025, who wish to consider stepping away from employment. This will help reduce the impact of administrative cost reductions on the rest of our workforce.
“Talent will continue to be the foundation for our success. The fact that Blue Cross has such a large percentage of our workforce eligible for retirement speaks to our reputation as a great place to work and build a career. In these challenging economic times for health care organizations, our company and employees are committed to doing what we can to soften the downstream impacts of higher costs on our customers and members. The VSO is one step to help us help them, while also honoring the service of our longtime employees.”
Blue Cross did not say how many employees have accepted the buyout.