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Where Your Health Care Dollars Go  

As a nonprofit mutual insurer, Blue Cross Blue Shield of Michigan and Blue Care Network make sure the money our members pay in monthly premium payments is spent where it belongs: on their health care.  

In fact, on average, nearly 90% of each health insurance premium dollar is spent on providing care* 

  • 19% is spent on inpatient claims 
  • 22% is spent on outpatient claims 
  • 27% is spent on professional claims (health care professionals providing care) 
  • 20% is spent on prescription drugs 

Only a small percentage of each premium dollar – about 7% – goes toward administrative costs, such as reviewing claims to guard against fraud and abuse. Approximately 2% goes toward paying taxes, fees and commissions.  

Part of what makes Blue Cross different is that we’re motivated by our members’ health and the health of everyone in Michigan. We have no shareholders to answer to and have only had surplus operating margins four times in the last 10 years 

When it comes to rising health care costs, we’ve led the way on innovations that lower the cost of care without lowering quality. 

  • Lowering drug costs. Earlier this year, we joined forces with the Blue Cross Blue Shield Association and several Blue Cross plans across the U.S. to partner with Civica Rx to ensure more generic medications are accessible and affordable.   
  • Sharing risk with providers. In 2019, we began partnering with physician organizations and health systems on a new payment model that rewards better health outcomes. Through improved quality and care coordination, our Blueprint for Affordability model will help prevent waste in the health care system that drives up cost.  
  • Improving quality to lower costs. Over the last decade, $2.2 billion in costs have been avoided thanks to our Value Partnerships efforts. This collection of programs helps physicians and hospitals across Michigan work together to share data and best practices, so health professionals can improve patient outcomes.  

In addition to our work to lower costs, we also invest heavily in communities across Michigan to support health access, wellness and quality care. In 2019 alone, this included $85 million paid to the Michigan Health Endowment Fund, bringing our total payments to the fund to $525 million over the years.     

Just as we’re trying to lower costs, we know many Michiganders are also looking at how health care fits into their budget. As you select health care coverage for 2021, our website offers tools and information to help you make a cost-effective choice for your individual or family needs.  

*Percentages are based on actual BCBSM experience for PPO business segments across the years 2017, 2018 and 2019.  

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