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LANSING — Today, Michigan Attorney General Dana Nessel filed a lawsuit in the United States District Court for the Eastern District of Michigan (PDF) against Blue Cross Blue Shield of Michigan Mutual Insurance Company (“BCBSM”), alleging an illegal health insurance monopoly in Michigan. Attorney General Nessel argues the health insurance monopoly was accomplished and operates in violation of federal and state antitrust law, and has significantly contributed to, or caused, many of the rising costs and negative health outcomes facing Michigan residents.
BCBSM controls 65% of the market for health insurance products in the State and 79% of the PPO market. The Attorney General argues this commanding market power was obtained by a series of illegal and anti-competitive agreements in conspiracy with the entire Blue Cross Blue Shield network to allocate customers and territories, to restrict product offerings, and to eliminate competition for health insurance services. BCBSM used this market power to inflate the premiums and out-of-pocket costs of Michigan businesses and consumers. BCBSM further abused its market dominance by driving down the rates it paid healthcare providers to near the lowest in the nation, sometimes even below the medical providers’ own costs to provide care. Medical professionals have been forced to reduce services, replace medical staff with administrative positions, close facilities, or exit the Michigan market entirely, causing significant degradation to the healthcare landscape in the State, and leading to worse and worsening health outcomes for Michigan residents.
Attorney General Nessel argues the cumulative impact of this anticompetitive conduct by BCBSM is the systematic deprivation of fair, affordable, and accessible health insurance and healthcare in Michigan.
“Blue Cross Blue Shield of Michigan, as a member of the Blue Conspiracy, has built and operated an illegal monopoly on health insurance coverage in Michigan, and today we brought this lawsuit for the millions of Michigan households, patients, parents, providers, doctors, small business owners, large employers and taxpayers, and consumers everywhere that are paying the price for Blue Cross’s unchecked market power,” said Attorney General Nessel. “Blue Cross Blue Shield of Michigan has implemented substantial premium increases and deep reimbursement cuts, unchecked by meaningful competition, to drive up our costs of care, drive down our quality of care, and turn our worsening medical outcomes into their increasing profits. Today we’re taking a significant step toward ending the Blue Conspiracy and their illegal monopoly.”
Patients and providers alike have felt the impact of rising healthcare costs in Michigan. Healthcare providers in Michigan have no meaningful alternative to contracting with BCBSM affiliated companies. Michigan presently has some of the lowest reimbursement rates for healthcare providers in the region, including emergency doctors, ranks as having the fourth least competitive insurance markets among states, and is ranked middlingly for doctor retention – far below other Midwest states like Indiana, Minnesota and Wisconsin.
Rising costs of, and diminished access to, health insurance coverage and care are both impacting Michigan residents in significant ways:
- More than 40% of Michigan small business owners say increasing health care costs are pushing them to a breaking point and they may have to drop health coverage altogether.
- Over 68% of adults surveyed in 2025 experienced at least one health care affordability problem where they were forced to skip or delay medical care due to cost.
- Michigan’s infant mortality rate increased significantly between 2018 and 2022 as 11 hospitals or providers were forced to close labor and delivery units due to declining payer reimbursements, leaving over 1 in 5 of Michigan’s counties as maternity care deserts.
- Michigan ranks 20th in the nation for people with medical debt in collections, 20th for adults who went without care in 2024 because of costs, 25th in the nation for individuals under 65 with high out of pocket medical costs relative to their annual household income, and 35th for premature deaths from treatable causes.
“Blue Cross controls about two-thirds of the commercial insurance market in this state. Like a lot of Michigan families, our employers don't offer an alternative. And there is no public option,” said Andrew Bashi, a parent and patient advocate. “Nothing a family can turn to when their insurer and their child's hospital can't come to terms. Antitrust law exists because concentrated power gets abused, and the people who pay for that abuse are the ones with the least ability to walk away.”
In June, Sturgis Hospital was forced to close completely, citing inadequate reimbursement for rural healthcare. The Sturgis closure eliminated all hospital departments and outpatient services in the community, including the emergency room, surgery, laboratory, medical imaging, physical therapy, cardiac rehabilitation, and clinics. And a highly publicized 2026 dispute between BCBSM and Michigan Medicine arose when BCBSM proposed an “unsustainable” 30% reduction in reimbursement rates, disrupting essential care for thousands of enrollees, which could have left nearly 300,000 Michigan residents needing to find a new healthcare provider, including for some highly specialized medical services that only Michigan Medicine offers.
“American Physical Therapists Association (APTA) of Michigan has witnessed firsthand the damaging effects of BCBS reimbursement cuts on physical therapy providers throughout the state,” said Brian Gilbert, APTA Michigan Chapter President. “Reductions totaling nearly 20% per visit over the past year have pushed many clinics to the brink, resulting in clinic closures, workforce reductions, and frozen hiring despite growing patient demand. When a single payer has the ability to significantly reduce reimbursement rates across a market, the effects ripple through the healthcare system, impacting wages, staffing, innovation, and ultimately the quality and availability of care. We believe these impacts should be carefully considered as this matter moves forward.”
Attorney General Nessel sued today to hold BCBSM liable for two claims of violation of the Sherman Act, four claims of violations of the Michigan Antitrust Reform Act, one claim of Public Nuisance, and one claim of Unjust Enrichment. The lawsuit asks the Court to permanently enjoin BCBSM from continuing their anticompetitive conduct in Michigan’s healthcare markets, and award the State all available damages, disgorgement, and civil monetary penalties. Through this lawsuit, Attorney General Nessel aims to increase access to, and lower the costs of, vital health services in our State.
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