A Response for Drug Pricing Reform - Addressing Insurance Cost Drivers

In a recent Detroit Free Press op-ed, MichBio CEO, Stephen Rapundalo, responded to an article by the CEO of Blue Cross Blue Shield of Michigan that discussed the factors behind rising health insurance costs.  

In their commentary, the BCBSM CEO outlined factors such as pharmaceutical pricing, increased utilization, inflation, and lingering post-pandemic care patterns in driving insurance premium increases for Michigan 

While these are indeed important contributors, MichBio’s op-ed emphasized that a crucial piece of the conversation is being overlooked – the insurance sector itself – and that focusing solely on external cost drivers paints an incomplete picture. Insurers themselves hold considerable power over how care is accessed, reimbursed, and priced. Decisions around network design, reimbursement models, and administrative complexity directly influence what patients pay at the point of care.

Rapundalo’s op-ed highlighted the growing concern around pharmacy-benefit management and benefit design. For some insured patients, the out-of-pocket costs for medications can actually exceed what they would pay without insurance, due to pricing structures negotiated between insurers and PBMs. This is a systemic issue that deserves greater transparency. Reforming the healthcare system must therefore include examining how payers themselves contribute to the affordability crisis.

For Michigan families, small businesses, and healthcare providers, rising insurance costs have real and lasting consequences. Employers struggle to maintain coverage for their workers, while patients are forced to make difficult choices about care. This is not simply a healthcare issue - it is an economic one that affects innovation, workforce productivity, and community well-being.

Insurance affordability is a key pillar of the state’s long-term competitiveness with implications for the life sciences and health innovation sectors. When health coverage becomes less accessible or more expensive, it limits not only patient outcomes but also our ability to foster a thriving ecosystem of healthcare solutions and life-science startups.

If Michigan is to achieve genuine healthcare reform, the discussion must expand beyond providers and pharmaceutical companies to include the insurance industry itself. Policymakers and stakeholders need to demand more transparency about how premiums are calculated, how claims are managed, and how administrative costs factor into overall pricing.

Cost pressures in health insurance affect everyone—families, small businesses, employers, caregivers and patients. In Michigan’s life-sciences and healthcare ecosystem, the ability to innovate, deliver new therapies and maintain provider sustainability all hinge (in part) on a more affordable system.

Reform efforts should focus on aligning incentives across the system—reducing unnecessary complexity, promoting value-based care, and ensuring that innovation leads to affordability rather than exclusion. By taking this broader, more inclusive view, we can create a healthcare environment that delivers both quality and access for all Michiganders.

Here’s what MichBio thinks needs to happen next...