Healthcare insurance is broken. How do we fix it?
The brazen murder of UnitedHealthcare CEO Brian Thompson in broad daylight in midtown Manhattan last year has open the floodgates to an outpouring of anger and frustration with the health insurance industry.
- Blue Cross Blue Shield of Michigan reported a $1.7 billion underwriting loss in 2024, attributing it to increased medical service utilization and rising pharmaceutical costs.
- Outgoing CEO Daniel Loepp’s compensation decreased to $13.9 million in his final year, while new CEO Tricia Keith’s compensation won’t be reported until 2026.
The former top executive at Blue Cross Blue Shield of Michigan saw a pay cut in his final year before retirement as the health insurance company experienced its biggest underwriting loss in at least a decade.
Daniel Loepp, 67, who retired as Blue Cross’ CEO on Dec. 31, received all-cash compensation of $13.9 million last year, or about $1.85 million less than 2023, the insurer announced Monday.
Blue Cross had a $1.7 billion underwriting loss in 2024, giving it a negative 4.2% operating margin — its biggest negative margin in years. The loss was only partially offset by the insurer’s $757 million in positive investment gains.
Ultimately, The Blues had a bottom-line $1 billion loss in 2024 on $40.6 billion in total enterprise revenue, Blue Cross Chief Financial Officer Paul Mozak told reporters on a news media call Monday afternoon.
“While strong investment performance contributed to the bottom line, it could not compensate for total underwriting losses on our core health care business,” Mozak said.
Blue Cross has now had a negative operating margins for the past four years, following a period of small annual net gains during the 2010s.
The Blues attributes its big 2024 loss to higher claims from greater utilization of medical services and continued price escalation by the pharmaceutical industry. Specifically, the insurer paid $3 billion more last year for medical and pharmacy services than in 2023.
Tricia Keith replaced Loepp as CEO at the start of this year.
“Health insurers are facing significant economic headwinds — especially nonprofit carriers like us — that are jeopardizing the affordability of health insurance for employers and families across the country,” Keith said in a statement Monday. “Blue Cross is working diligently to manage the dramatically increasing cost and use of health care services.”
Blue Cross’ losses have meant higher premiums for policyholders as well as cutbacks at the insurer’s downtown Detroit headquarters.
Blue Cross raised premiums for 2025 on many group plans by 11.5% for 2025 — the biggest jump in years — and in January gave voluntary buyout offers to its nonunionized workforce in an effort to cut $285 million in costs this year, or $600 million total over three years.
On Jan. 1, the insurer also stopped covering the popular but expensive class of GLP-1 weight-loss drugs, including Mounjaro and Wegovy, for patients who only use them to lose weight. (Coverage for diabetes patients continues.)
Loepp had been Blue Cross’ CEO since 2006 and enjoyed his biggest payday in 2019, when he took home $19.2 million for the insurer’s performance the previous year.
His $13.9 million in 2024 compensation broke down as a $1.84 million base salary, a $10.75 million bonus and $1.3 million in “other” compensation, such as the value of benefits like life insurance.
Keith’s total compensation won’t be reported until 2026, as the company’s performance this year will determine the size of her bonus.
As a nonprofit mutual insurer that is taxable, The Blues reported paying $165 million in taxes last year to federal, state and local governments. It plans to make a $100 million payment next month to the Michigan Health Endowment Fund to help support wellness programs and insurance discounts.
Contact JC Reindl: 313-378-5460 or [email protected]. Follow him on X @jcreindl
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