Excellus BlueCross Blue Shield Reports Record Cost Increase in Claims and Expenditures
Excellus BlueCross Blue Shield reported a significant surge in expenditures for medical and prescription drug benefits last year, reaching nearly $7 billion in claims. The rise in costs was primarily due to increased hospital-related expenses and a resurgence in prescription drug spending, driven by higher utilization and growth in specialty medications for conditions like inflammation.
The company shared these insights in its annual report submitted to the New York State Department of Financial Services. Excellus emphasized the ongoing pressure from escalating healthcare costs on insurers nationally, impacting even local health plans.
On average, the insurer spent $19 million daily on member benefits, reflecting a 16% increase from the previous year, marking a record rise over the past two decades. This escalation was largely attributed to higher claims costs from Medicare Advantage members and increased inpatient admissions and hospital days. An aging and economically challenged membership also contributed to these trends.
Specialty drug usage has significantly influenced overall cost adjustments, with expenses approaching levels seen in 2022, before changes in Medicaid pharmacy program responsibilities. The company noted an increase in the use of GLP-1 medications, commonly prescribed for Type 2 diabetes and obesity, highlighting that advancements in treatment, while beneficial, come with increased expenses.
Serving over a million members in Upstate New York, Excellus increased rates in 2025, primarily due to heightened hospital costs, collecting $7.5 billion in premiums. It reported that 92% of every premium dollar is allocated to medical care, surpassing federal requirements, with the remainder covering taxes and operating expenses.
Despite experiencing an operating loss for a third consecutive year, Excellus posted $150 million in profits, attributed to dividends and significant capital gains. The net margin aligns with the nonprofit’s 2% target, reserving profits to mitigate potential cost spikes similar to those during the pandemic.
Ty Muse, chairperson of the Excellus board, reiterated the company’s strategy to maintain modest margins to ensure financial stability and maximize medical expenditure from premiums. CEO Jim Reed's total compensation rose to $4.94 million, up from $3.97 million, reflecting a 10% overall raise for top executives. Compensation is linked to performance outcomes measured by member satisfaction and health plan quality scores, under Reed's leadership since May 2021.