For Blue Cross, losses are likely to continue into this year, despite the insurer eliminating jobs, deploying computer algorithms to target doctors it believes are overcharging, restricting coverage of GLP-1 drugs for weight loss, and pushing back against health care providers seeking higher reimbursement rates.
The losses “are very material,” said Mike Guerriere, chief actuary for Blue Cross Blue Shield of Massachusetts, in an interview. “We are looking at a three-year span where we may lose over $1 billion.”
There was no shortage of reasons for the financial pain this past year. A full one-third of the insurer’s higher spending was driven by high pharmaceutical outlays, and much of that was the cost and high volume of prescriptions for the blockbuster GLP-1 medications, which have long been used to treat diabetes but have become wildly popular to treat obesity.
Blue Cross Blue Shield took steps last year to curb those costs, announcing it would no longer automatically cover the drugs, known by brand names such as Wegovy or Zepbound, when prescribed solely for weight loss. But that decision didn’t take effect until 2026, so the outlays on the drugs continued to weigh on the financials throughout 2025.
The state’s second largest insurer, Point32Health, followed suit to limit GLP-1 coverage for weight loss. And on Thursday, the Group Insurance Commission — which provides health coverage to over 460,000 state employees, retirees, and relatives — similarly pulled back coverage. Additionally, the state’s insurance for low-income residents, MassHealth, could stop coverage as soon as fiscal 2027.
The decision by Blue Cross will certainly help tamp down spending for this year. Over 79 percent of Blue Cross members taking GLP-1s were doing so for weight loss. Blue Cross allowed employers with more than 100 workers to still offer the coverage for the treatment of obesity but they had to pay more for it. Only 20 percent of employers took Blue Cross up on that offer this year.
“It’s a difficult thing to do. but it’s one of the big initiatives we’re trying to do on affordability,” Guerriere said, adding the change will make a big difference to Blue Cross’s financial performance in 2026.
The new restrictions, however, raise access questions that have come to define the fight over the drugs. Dr. Chika Anekwe, the clinical director of obesity medicine at the Massachusetts General Hospital Weight Center, said the withdrawal of coverage of GLP-1s by insurers has caused chaos and panic for patients and doctors.
“We’re trying to spread awareness about this and get the insurers to not take weight management as lightly as they are,” she recently said. “You don’t see them removing coverage for heart failure, hypertension, or diabetes as whimsically as they are with obesity.”
Others, including insurers and politicians, blame the drug companies themselves for the outrageous costs.
In a 2024 report, Senator Bernie Sanders, a Vermont Independent and chairman of the Senate Health, Education, Labor, and Pensions Committee, pointed out that if half of adults with obesity took Wegovy and other new weight loss drugs, the cost at the time — $411 billion per year — would exceed what Americans spent on all retail prescription drugs in 2022 — $406 billion.
“The outrageously high price of Wegovy and other weight loss drugs have the potential to bankrupt Medicare and our entire health care system,” Sanders said at the time.
The new curbs on GLP-1s have only partially kept premiums from ballooning even more, and other factors that contributed to losses for insurers are likely to be a growing problem in the year ahead.
For example, another one-third of the escalation in spending was attributed to higher reimbursement rates to providers, Guerriere said.
Already, Blue Cross faced losing important health care systems from its network of providers for consumers because of its position on rate increases. Last year, Blue Cross and UMass Memorial Health narrowly avoided a contract fallout over rates, which would have forced nearly 200,000 people in Central Massachusetts to find new doctors.
The sides ultimately resolved the contract, though didn’t specify any details of their new three-year deal.
More such battles are sure to follow, as health systems, many themselves strapped financially, seek higher payments from an insurer that is struggling to operate in the black.
Blue Cross also had higher outlays because of how much health care people are using and where they are getting it. Hospitals are billing insurers for more services, whether because people are needing more care or because evolving technology has allowed hospitals to bill more intensively than they have in the past. Some consumers are shifting where they get care, going to hospitals and providers that cost more, which can also increase spending.
Typically insurers set premiums high enough to accommodate the various increases in spending. But in the current high-pressure environment, it is proving challenging keeping to a budget that was set on premiums decided a year in advance. And like many insurers, Blue Cross didn’t anticipate such high use of GLP-1s or overall medical services in 2025.
And even so, Guerriere doubted the insurer could have adequately priced for all this consumer demand and kept premiums within reach.
Internally, the insurer has taken steps to reduce administrative costs, with a voluntary buyout that 270 employees took. The insurer also said it is eliminating an undisclosed number of positions, consolidating its real estate footprint, and renegotiating vendor contracts.
Despite those steps, it is unlikely Blue Cross will end 2026 in the black. While the insurer’s approximately $3 billion in reserves can help absorb such losses, three consecutive years of such huge numbers amount to a meaningful hit.
“It’s very significant and unprecedented for us in terms of the size and scope,” Guerriere said, of the losses. “Things seem different and we have to react accordingly to try to combat it.”
Jonathan Saltzman of the Globe staff contributed reporting.
Jessica Bartlett can be reached at jessica.bartlett@globe.com. Follow her @ByJessBartlett.