In a new lawsuit, Michigan Attorney General Dana Nessel is accusing Blue Cross Blue Shield of Michigan of conspiring with other Blues plans to block competition and using its grip on the health insurance market to overcharge the state and underpay hospitals.
“This illegal conduct has caused the state and Michigan consumers to pay inflated prices for health insurance and medical benefit coverage while receiving diminished quality of care,” the Oct. 8 complaint filed in a Detroit federal court said.
BCBSM controls 65% of the state’s commercial health insurance market and 79% of the PPO market, according to the lawsuit, which cited a 2025 AMA report that ranked Michigan fourth among states with the least competitive insurance markets.
BCBSM also administers the state’s employee health plan, and each time Michigan sought bids for the contract, other Blues plans refused to compete for it, the complaint alleges. The insurer allegedly paid duplicate and defective claims, charged undisclosed “savings” fees and kept rebates that should have gone to the state, as well.
The complaint also alleges that BCBSM’s payment rates rank among the lowest in the nation and in some cases fall below the cost of care, pushing hospitals to cut staff, reduce services or close entirely. The lawsuit pointed to the insurer’s contract dispute with Ann Arbor-based Michigan Medicine earlier this year, along with the June closure of a rural hospital in the state.
“We were blindsided by this announcement by the Attorney General,” a spokesperson for the insurer told Becker’s. “Blue Cross Blue Shield of Michigan has not yet been served and therefore we cannot comment on the specific merits of the case. We fundamentally disagree with the Attorney General’s characterization of an uncompetitive insurance market in Michigan. Competition exists everywhere in our state’s insurance markets, with strong local and national insurers competing with us every day. For nearly 90 years, Blue Cross has provided coverage for citizens across Michigan, in every county, without exception. This heritage, and the quality of products and services we provide, is foundational to our success in Michigan.”
Michigan’s lawsuit is the latest in a string of antitrust challenges against the wider BCBS system dating back more than a decade related to allegations of affiliates conspiring to divide up markets and avoid competition between each other, thereby driving up costs for consumers. A class action filed by health plan members in 2012 resulted in a $2.67 billion settlement that began paying out earlier this year. As part of that, BCBS companies were required to eliminate a rule that capped how much business a plan could do under non-Blue brands and allow certain large employers to seek bids from a second Blues plan.
Michigan is seeking triple damages, civil penalties of up to $50,000 per violation of state antitrust law, the return of profits and a court order barring BCBS from any agreement to divide customers or territories, along with a jury trial.
BCBSM has 5.1 million members and reported a net loss of $246 million on enterprise revenue of $43.3 billion in 2025.
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