Michigan Medicine announced a strategic shift, discontinuing its U-M Health Plan after 2025 to focus on its core strengths in patient care, education, and research.
This decision, announced on November 27th, comes after a thorough evaluation of the plan’s financial sustainability and the evolving healthcare landscape.While the U-M Health Plan, wich includes Michigan Care and Michigan Care Advantage, will cease accepting new claims after December 31st, 2025, Michigan Medicine guarantees payment processing for all claims filed until the end of that year.
Members will receive timely notifications detailing this transition.
University spokesperson Mary Masson explained that this move was driven by a number of factors, including the intensely competitive health insurance market in Michigan and changes within the Centers for Medicare and Medicaid Services (CMS) programs.
“Despite our best efforts to maintain the plan, the increasingly competitive health insurance landscape, along with CMS changes to Medicare advantage plans, has made it unsustainable to continue offering the high level of service our members deserve,” Masson stated.
Acknowledging the potential impact on employees, Masson emphasized Michigan Medicine’s commitment to providing support through reassignment opportunities, severance packages, and career counseling.
“We are deeply appreciative of our employees and will be providing severance and career counseling to those affected,” she added.
Alternative extensive health insurance plans will be offered to eligible faculty, staff, and retirees. Other members, typically students, will have access to a different U-M health insurance plan effective January of next year.
Richard Hirth, a health policy expert and professor at the University of Michigan, believes the discontinuation will have a minimal impact locally. However, he anticipates a more significant affect in the Lansing area, where the plan originated before being acquired by Michigan Medicine.
Additional insights come from health policy consultant Allan Baumgarten, who believes the move from operating a health plan is primarily an economic decision. He notes that Michigan Medicine’s financial losses and the state’s trend of institutions exiting the health insurance business further support this interpretation.
Michigan Medicine’s decision signifies a strategic realignment, enabling the institution to invest its resources in its primary areas of expertise while ensuring a smooth transition for members and employees.
What factors are influencing Michigan Medicine’s decision to discontinue the U-M Health Plan?
Interview wiht Health Policy expert Richard Hirth on Michigan Medicine’s Strategic Shift
Editor, Time.news: Thank you for joining us today, Professor Hirth. Michigan Medicine recently announced its decision to discontinue the U-M Health Plan after 2025.What do you think prompted this significant shift in strategy?
Richard Hirth: Thank you for having me. The decision by Michigan Medicine reflects a broader trend in the healthcare industry rather than an isolated incident. Thay conducted a thorough evaluation of the U-M Health Plan’s financial sustainability within an intensely competitive health insurance market in Michigan. The changes implemented by the Centers for Medicare and Medicaid Services (CMS) regarding Medicare Advantage plans also played a crucial role in this decision. These factors contributed to the conclusion that maintaining the plan was unsustainable if they wanted to continue delivering the high quality of service their members deserve.
Editor: That’s a strong point. Can you elaborate on how this move might impact the local community, especially in the Lansing area?
Richard Hirth: Certainly. While I believe the overall impact will be minimal for most of Michigan, there will likely be significant effects in the Lansing area, which is where the U-M Health Plan originated. This region may experience a shift in its healthcare offerings and perhaps increased competition as members seek option insurance providers. The impact can be felt on both the individual level and within the local healthcare ecosystem,where competition could drive changes in service delivery and pricing.
Editor: Michigan Medicine has committed to supporting affected employees through reassignment opportunities and severance packages. How important is it for organizations to provide such support during transitions like this?
Richard Hirth: It’s crucial. Organizations like Michigan Medicine must recognize the human element involved in these transitions. providing severance packages, career counseling, and reassignment opportunities not only helps employees navigate their next steps, but it also preserves the organization’s reputation. It shows that they value their workers and are committed to their well-being, which is essential for maintaining morale and trust in the long run.
Editor: Allan Baumgarten, a health policy consultant, interpreted michigan Medicine’s decision as primarily economic. Do you agree with that assessment?
Richard Hirth: Yes, I do. The decision to discontinue the health plan heavily leans on economic factors. Michigan Medicine has been facing financial losses with the plan, which is not unlike many institutions in Michigan that have exited the health insurance business recently.Focusing resources on primary areas—such as patient care, education, and research—will likely streamline their operations and enable them to invest more effectively in those strengths.
Editor: What are your recommendations for individuals who are currently enrolled in the U-M Health Plan as they transition to new insurance options?
Richard Hirth: The most critically important step for individuals is to stay informed. They should read the notifications from Michigan medicine carefully and make sure they understand their options. For those covered under the plan, pursuing alternative extensive health insurance plans offered to eligible faculty, staff, and retirees—or the new U-M health insurance plan for students—will be essential. It’s advisable for members to engage with michigan Medicine’s support services to help them navigate this transition smoothly.
Editor: Thank you for your insights, Professor Hirth. As Michigan Medicine pivots to focus on its core competencies, we appreciate your perspective on the implications for employees and the community.
richard Hirth: Thank you for having me. It’s important to closely watch how these changes will unfold in the healthcare landscape.