The burden of weight loss drugs drove red ink at the state’s second-largest insurer last year, contributing to the fifth year of multimillion-dollar operating losses.
It was perhaps no surprise that Point32Health, which owns Harvard Pilgrim Health Care and Tufts Health Plan, said Monday that it lost money yet again in 2025.
Like many in the market, the insurer has been struggling to accommodate the high cost and popularity of GLP-1 drugs, which historically were used to treat diabetes and have recently become popular for people with obesity. Blue Cross Blue Shield of Massachusetts, the state’s largest insurer, said Friday it had its second-worst financial year in its history last year, citing in part spending on GLP-1 drugs.
After spending $100 million on the drugs for weight loss in 2024 and seeing sizable operating losses to boot, Point32Health announced in May that it would stop automatically covering the drugs for obesity starting in 2026.
But with a delay in the restrictions taking effect, the costs still weighed on the insurer’s income statement this past year, with Point32 spending $180 million on GLP-1s for weight loss alone. That class of drug was “a substantial driver” of increased medical spending for the insurer overall, said Mike Marrone, chief financial officer for Point32Health.
The insurer saw other cost growth that outpaced revenue collected from premiums, including increased spending on cancer treatments, behavioral health care services, and high cost claims for certain care, including for cardiac conditions and sepsis.
Though the insurer undertook two layoffs last year — cutting 110 positions in March and another 254 in October — and renegotiated some deals with vendors, it wasn’t enough to fully address the red ink. In all, the insurer reported a $301 million operating loss on $9.8 billion in revenue. Those numbers could have been worse, as they included $198 million in a premium deficiency reserve the insurer had booked the prior year.
However the insurer has yet to operate in the black since it merged the state’s second- and third-largest insurers, Harvard Pilgrim and Tufts, in 2021.
Marrone said 2026 is a “bridge year” for Point32. The benefit changes for GLP-1s will greatly reduce spending. The insurer is also trying to drive members to lower-cost sites of care as well as better managing the kinds of inpatient services members use, while reducing the need for readmissions.
“We are planning for substantial improvement over 2025 results,” Marrone said. “We will see whether we make it into the black or not.”
Executives wouldn’t say if more layoffs were coming. The size of the workforce is something that is “continuously evaluated,” Marrone said.
Marrone said despite five years of losses, the insurer had $1.1 billion in reserves, a number he said was strong.
While things may be trending in the right direction, the runway for a turnaround won’t last forever, said Paul Hattis, senior fellow at the Lown Institute, a nonpartisan health care think tank.
“They can’t sustain these kinds of levels of operating deficits year-in and year-out,” Hattis said. “Ultimately they have limited reserves, which could be threatened if they continue to sustain multi-year, hundreds-of-millions-of-dollar losses.”
The strength of the Massachusetts insurance landscape is dependent on having multiple financially sustainable nonprofit insurers, Hattis said, rather than setting up insurers as targets for acquisition or merger with for-profit plans.
“I am hopeful this is an improvement,” Hattis said. “But concern remains if they can’t get back to break even in a reasonably quick timeframe.”
Jessica Bartlett can be reached at jessica.bartlett@globe.com. Follow her @ByJessBartlett.