Outgoing Attorney General Dana Nessel is leaving Michigan with an antitrust lawsuit that can only lead to higher healthcare costs, while she claims it will do the opposite. The case filed less than a month before the 2026 general election accuses Blue Cross Blue Shield of Michigan Mutual Insurance Company, BCBSM, of operating an illegal health insurance monopoly that “has significantly contributed to, or caused, many of the rising costs and negative health outcomes facing Michigan residents.”

Nessel asserts two claims against the company. The first is that BCBSM controls 65% of the market for health insurance in the state and uses that market position “to restrict output, and to eliminate competition for health insurance services.” The second is that the company “abuses its dominant market position to drive the rates it pays healthcare providers to some of the lowest in the nation.”

Taken together, the two claims contradict each other. The claim that BCBSM restricts competition in the health insurance market, if true, likely would lead to higher prices for insurance. The second, regarding driving down payments to providers, would mean that BCBSM’s lower costs can be passed on to patients as lower prices for health insurance. If Nessel were to prevail in this lawsuit, it is unclear whether consumers would pay less — or more — for healthcare.

If BCBSM is actually using its market power to pay providers less, those providers might have their own antitrust case. But what would happen if Nessel were to prevail? The insurer would be forced to pay more to medical care providers. That would be a good outcome for the providers. But those costs would inevitably have to be passed on to the very healthcare consumers that Nessel claims to defend with this lawsuit.

In other words, Nessel is suing to force Michigan patients to pay more for their healthcare.

The lawsuit says that BCBSM uses its market power to restrict output and drive up prices for health insurance. But it says very little to explain how the company acquired this market power. Instead, the lawsuit asserts that it is somehow self-evident that “Blue Cross’s dominance has driven competing insurers out of the Michigan market, forcing tens of thousands of Michiganders to scramble for new coverage in a diminishing pool of choices.”

It is true: We have seen an exodus of healthcare insurance companies in Michigan. But there is an obvious explanation, and it never appears in Nessel’s lawsuit. The 2010 Affordable Care Act (ACA), sometimes called “Obamacare,” created a reimbursement structure that favors large insurers such as the Blues.

The ACA makes it difficult for smaller insurers to compete, and unsurprisingly, many of them are forced to merge with larger providers or go out of business. A variety of requirements in the ACA make it all but impossible for small insurers to compete: the ACA’s individual mandate, its guaranteed issue requirement, its ban on caps on annual and lifetime benefits, and its lengthy list of other mandatory benefits. They all favor large insurers that can survive thanks to their economies of scale.

Insurance company consolidation, which is occurring in all states and not just Michigan, leads to less competition and contributes to higher insurance prices. But that is not the result of an illegal antitrust conspiracy or abusive monopolization, as Nessel’s lawsuit claims. Rather, it is the market responding to incentives created by government policy.

The solution is not to accuse insurance companies of violating the antitrust laws for reacting in a predictable way to incentives created by a federal regulatory structure. So long as that is what BCBSM is doing, the company has not violated antitrust laws, and Nessel’s case will fail. Much of the problems in the health insurance market are created by the government. The solution, then, is to change or eliminate the perverse government incentives, not to sue the companies that respond to those incentives.

Many people are understandably dissatisfied with their health insurance companies and rising costs. But Nessel’s antitrust lawsuit does nothing to address the reasons why people are so frustrated. It makes little economic sense, contains causes of action that contradict each other, and does nothing to address the underlying causes of healthcare consolidation. Nessel’s antitrust case can only make these problems worse and lead to even higher prices for Michigan patients.

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