The Blue Cross Blue Shield Association (BCBSA) is a federation of 39 separate health insurance organizations and companies in the United States. Combined, they directly or indirectly provide health insurance to over 100 million Americans.[3] The history of Blue Cross dates back to 1929, while the history of Blue Shield dates to 1939. The Blue Cross Association dates back to 1960, while its Blue Shield counterpart was actually created in 1948. The two organizations merged in 1982, forming the current association. The company has its headquarters in the Michigan Plaza complex in the Chicago Loop area of Chicago, Illinois.
History
Blue Cross and Blue Shield developed separately, with Blue Cross plans providing coverage for hospital services, while Blue Shield covered physicians’ services.
Blue Cross is a name used by an association of health insurance plans throughout the United States. Its predecessor was developed in 1929, by Justin Ford Kimball, at Baylor University in Dallas, Texas.[6] The first plan guaranteed teachers 21 days of hospital care for $6 a year, and was later extended to other employee groups in Dallas, and then nationally.[6] The American Hospital Association (AHA) adopted the Blue Cross symbol in 1939 as the emblem for plans meeting certain standards. In 1960 the AHA commission was superseded by the Blue Cross Association. Affiliation with the AHA was severed in 1972.
The Blue Shield concept was developed at the beginning of the 20th century by employers in lumber and mining camps of the Pacific Northwest to provide medical care by paying monthly fees to medical service bureaus composed of groups of physicians.[7] The first official Blue Shield Plan was founded in California in 1939. In 1948 the symbol was informally adopted by nine plans called the Associated Medical Care Plan, and was later renamed the National Association of Blue Shield Plans.
In 1982 Blue Shield merged with The Blue Cross Association to form the Blue Cross and Blue Shield Association.[8]
Prior to the Tax Reform Act of 1986, organizations administering Blue Cross Blue Shield were tax exempt under 501(c)(4) as social welfare plans. However, the Tax Reform Act of 1986 revoked that exemption because the plans sold commercial-type insurance. They became 501(m) organizations, subject to federal taxation but entitled to “special tax benefits”[9] under IRC 833. In 1994, the Blue Cross Blue Shield Association changed to allow its licensees to be for-profit corporations.[5] Some plans[specify] are still considered not-for-profit at the state level.
Current organization
Blue Cross and/or Blue Shield insurance companies are franchisees, independent of the association (and traditionally each other), offering insurance plans within defined regions under one or both of the association’s brands. Blue Cross Blue Shield insurers offer some form of health insurance coverage in every U.S. state. They also act as administrators of Medicare in many states or regions of the U.S., and provide coverage to state government employees as well as to the federal government employees under a nationwide option of the Federal Employees Health Benefit Plan.[10]
The 14-state WellPoint is the largest Blue Cross Blue Shield member, and is a publicly traded company. Other multi-state organizations include CareFirst in the Mid-Atlantic and The Regence Group in the Pacific Northwest. The largest non-investor owned member is Health Care Service Corporation,[citation needed] which operates four Blue Cross and Blue Shield Plans in the Midwest and Southwest.
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