University of Michigan Health Plan through Ann Arbor-based Michigan Medicine will end after 2025.
The move follows financial losses in recent years and a "thorough business and financial assessment," according to UM Health Plan, which operates Michigan Care and Michigan Care Advantage.
Michigan Medicine spokesperson Mary Masson told MLive UM Health Plan has about 190 employees and covers about 64,000 patients.
UM Health Plan will discontinue operations on Dec. 31, 2025. Groups and members' claims, including for services received on Dec. 31, 2025, will be paid in 2026, according to a page of frequently asked questions. Pharmacy benefits, which are administered by Prime Therapeutics, are not affected.
"We recognize the importance of affordable and reliable healthcare, and this decision was not made lightly," Ms. Masson told MLive. "Despite significant efforts to maintain the plan, the increasingly competitive health insurance landscape and changes to Medicare Advantage plans have made it unsustainable to continue offering the high level of service our members deserve."
Ms. Masson added that layoffs are expected for workers operating the UM Health Plan, but the hope is to reassign affected employees within Michigan Medicine or assist them in finding other jobs.
UM Health acquired Lansing-based Sparrow Health System in April 2023. The acquisition included a 90% share of Physicians Health Plan, which was rebranded as U-M Health Plan last year.
The Michigan Nurses Association, which represents 2,000 nurses and healthcare professionals at University of Michigan-Health Sparrow, is raising questions about the UM Health Plan discontinuation.
"Many of U of M Health Sparrow's thousands of employees rely on the health insurance plan, which we were told was one of Sparrow's assets that attracted U of M Health to buy Sparrow," Jeff Breslin, RN, president of the Professional Employee Council of Sparrow Hospital-Michigan Nurses Association, said in a news release.
"Did U of M Health buy the plan just to shut it down? It's impossible to believe that no higher-ups knew about the plan’s financial troubles before U of M Health bought Sparrow. At the least, they should have known. And to drop this bomb on healthcare workers during negotiations — to take away coverage of the very care we provide without a solid option — is just unacceptable."
Both sides are in negotiations for a new contract; the last contract expired Oct. 30.