Blue Cross Blue Shield of Massachusetts is offering voluntary buyouts to 750 employees, or about 18% of its workforce. The initiative targets employees aged 55 and older with at least a decade of service.
The decision comes as the company reported a net loss of $223.6 million and an operating margin of a negative 4.3% last year.
“We recognize that at this moment of unprecedented growth in the cost of health care, all of us have to do everything we can to make care more affordable for employers and families,” a spokesperson told Becker’s Payer Issues. “We know we’re asking a lot of others, including our physician and hospital partners. We understand we also need to do our part, so we’re doing everything we can to control the piece that’s most in our control, which is administrative spending.”
BCBS, the largest health plan in Massachusetts, has a workforce of about 4,200 people. This buyout program is being offered amid what the company describes as its largest financial losses in history, which it attributes to soaring health care costs and steep financial losses, the website Here Boston reported. The last time it offered a voluntary buyout program was in the late 1980s during a period of broad economic weakness in the state economy tied to technology and real estate market busts.
“Costs for medical care and medications for our members have escalated rapidly, and spending is now growing at the fastest rate in more than a decade,” CFO Ruby Kam said earlier this year. “The surge in spending is putting a heavy and unsustainable burden on our employer customers and members who are struggling to keep up with rising costs.”
Kam noted that although the spending increase is across most service categories, the costs related to new and popular GLP-1 weight-loss medications have had the biggest single impact. In fact, five GLP-1 drugs now account for nearly 20% of pharmacy spending, totaling more than $300 million in 2024 -- twice the number in 2023.
The organization is taking specific actions to address these significant financial challenges, including pricing benefit plans to reflect higher costs, working collaboratively with physicians and hospitals to moderate the growth in the prices of services, and identifying solutions to address the major impact of prescription drug and pharmaceutical costs, it said in a news release.
“Given the current environment, we don’t expect the cost pressures to ease off any time soon,” President and CEO Sarah Iselin wrote in a letter earlier this year. “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.”
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