Blue Cross and Blue Shield of Minnesota reported a $353 million operating loss in 2025, a sharp shift from the $27.6 million operating income it recorded the year before, as costs in Medicare Advantage and Medicaid plans continued to rise.
The insurer said its performance in these government-backed programs was affected by payments that have not kept up with growing medical costs and higher use of services. It also pointed to increased spending on specialty drugs, including GLP-1 medications, and hospital inpatient care.
“While financial resilience gives Blue Cross some flexibility to navigate volatility, long-term stability requires a path where payments coming in truly cover the actual cost of care,” CEO Dana Erickson said in a statement.
Despite the operating loss, the company still posted $83 million in net income, helped by strong investment returns. It also reported paying $9.8 billion in medical and pharmacy claims during the year.
The company said growth in its Medicare and Medicaid businesses added to the pressure. Medicare enrollment increased as some insurers reduced or exited certain plans due to regulatory challenges. Blue Cross said it had to expand its operations to handle that growth, raising costs in already volatile segments.
In Medicaid, higher enrollment led to losses in Minnesota’s Prepaid Medical Assistance Program and MinnesotaCare, which provides low-cost coverage for low-income residents.
The insurer also changed how it reports its financial results. A spokesperson said it now reflects only fully insured lines of business, removing premium equivalents from self-insured groups to allow for “clearer comparability and alignment with how the majority of health plans report financial results.”
“While I have the utmost confidence in our ability to provide financial stewardship in a very challenging environment, it is imperative for us to make significant changes in how we fulfill our non-profit mission over the long term,” Erickson said.
The results reflect broader pressures across the industry. AM Best said its outlook for US health insurers remains negative, citing higher medical costs, increased use of care, and rising morbidity across key lines of business. It added that Medicare Advantage, Medicaid managed care, and individual ACA plans are facing the most strain, while commercial group plans have also seen weaker performance.
Operating entities of nonprofit parent Aware Integrated Inc. currently hold a Best’s Financial Strength Rating of A- (Excellent).
