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Blue Cross Blue Shield Association

This article is about American medical insurance companies. For other uses, see Blue Cross (disambiguation).
Blue Cross Blue Shield Association
Industry Health insurance
Founded 1929
Headquarters Michigan Plaza
Chicago, Illinois
Key people
Scott Serota , President and CEO[1]
Products PPOs, HMOs
Revenue $21.3 billion US$ (2013)[2]
Number of employees
Website [1]

The Blue Cross Blue Shield Association (BCBSA) is a federation of 37 separate United States health insurance organizations and companies, providing health insurance to over 100 million Americans.[3] Blue Cross was founded in 1929, and became the Blue Cross Association in 1960, while Blue Shield emerged in 1939 and the Blue Shield Association was created in 1948. The two organizations merged in 1982.


Further information: History of insurance
Health care in the United States
Government Health Programs

Private health coverage

Health care reform law

State level reform
Municipal health coverage

Blue Cross and Blue Shield developed separately, with Blue Cross plans providing coverage for hospital services and Blue Shield covering physicians' services.[4]

Blue Cross is a name used by an association of health insurance plans throughout the United States. Its predecessor was developed by Justin Ford Kimball in 1929, while he was vice president of Baylor University's health care facilities in Dallas, Texas.[5] The first plan guaranteed teachers 21 days of hospital care for $6 a year, was later extended to other employee groups in Dallas, and then nationally.[5] 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 In 1960, the AHA commission was superseded by the Blue Cross Association. Blue Cross severed its ties with the AHA in 1972.

Blue Shield was developed 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.[6][not in citation given] In 1939, the first official Blue Shield Plan was founded in California. 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 the 1960s the US government chose to partner with Blue Cross and Blue Shield companies to administer Medicare.[6]

In 1982, Blue Shield merged with The Blue Cross Association to form the Blue Cross and Blue Shield Association (BCBS).[7]

Prior to 1986, organizations administering BCBS were tax exempt under 501(c)(4) as social welfare plans. However, the Tax Reform Act of 1986 revoked the exemption, because the plans sold commercial-type insurance. They became 501(m) organizations, subject to federal taxation, but entitled to "special tax benefits"[8] under IRC 833.[9]

In 1994, BCBS changed to allow its licensees to be for-profit corporations.[4] During 2010, Health Care Service Corporation, the parent company of BCBS in Texas, Oklahoma, New Mexico, Montana and Illinois, nearly doubled its income to $1.09 billion in 2010, and began 4 years of billion-dollar profits.[10] In the final spending bill for FY 2015 after much lobbying since 2010, nonprofit Blue Cross and Blue Shield plans continue to have special tax breaks that were understood to be threatened by the Affordable Care Act of 2010.[11]

Current organization

Blue Cross and Blue Shield insurance companies are licensees, independent of the association and traditionally of 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 US[12] 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.[13]

The 14-state Anthem Inc is the largest Blue Cross Blue Shield plan, and is a publicly traded company. Other multi-state organizations include CareFirst in the Mid-Atlantic, The Regence Group in the Pacific Northwest, and Highmark which serves Pennsylvania, Delaware, and West Virginia. The largest non-investor owned member is Health Care Service Corporation,[citation needed] which operates five Blue Cross and Blue Shield Plans in the Midwest and Southwest (Illinois, Oklahoma, Texas, Montana, and New Mexico).

The association has its headquarters in the Michigan Plaza complex in the Chicago Loop area of Chicago, Illinois.[14]

Member companies

Details on specific organizations


BlueCross of Idaho and Regence[18] BlueShield of Idaho are separate companies and compete head to head throughout the state.


Though historically "Blue Cross" was used for hospital coverage while "Blue Shield" was used for medical coverage, today that split only exists for traditional health insurance plans in eastern Pennsylvania, where Independence Blue Cross (Philadelphia) and Blue Cross of Northeastern Pennsylvania each have joint marketing agreements with Highmark Blue Shield (Pittsburgh) for their separate hospital and medical plans. However, Independence Blue Cross, like most of its sister Blue Cross-Blue Shield companies, cover most of their customers under managed care plans such as HMOs and PPOs which provide hospital and medical care in one policy.

Criticism and controversy

The Seattle Times published an article on February 9, 2012, alleging non-profit insurance outfits, including Premera Blue Cross, Regence BlueShield and Group Health Cooperative, are stockpiling billions of dollars in reserves while increasing their rates at the same time.[19] Insurance companies do have statutory reserve requirements set by the states in which they operate, but the Seattle Times article cites Washington state insurance Commissioner Mike Kreidler arguing that these companies have in excess of $1 billion more than needed to cover claims and disaster contingencies.

See also


  1. ^ BCBSA (n.d.). "Scott P. Serota. President and Chief Executive Office". BCBS. 
  2. ^ Blue Cross reports 2013 financials: Revenue up slightly, net income down 20 percent from Crain's Detroit Business
  3. ^ Blue Cross and Blue Shield Association – About Us
  4. ^ a b Coordinated Issue Paper – Blue Cross Blue Shield/Health Insurance; Life Insurance: Conversion of nonprofit corporations. 4 June 2008)[dead link]
  5. ^ a b Justin Ford Kimball from the Handbook of Texas Online. Retrieved August 31, 2009.[dead link]
  6. ^ a b Marc Lichtenstein (n.d.). "Health Insurance From Invention to Innovation: A History of the Blue Cross and Blue Shield Companies". Blue Cross and Blue Shield Association. 
  7. ^ "History of Blue Cross and Blue Shield Association – 1980s". Blue Cross and Blue Shield Association. [dead link]
  8. ^ "Nonprofit Health Inc.: Overview of issues in the protection of nonprofit assets - Blue Cross: 501(m)". Consumers Union. 1 January 2008. Retrieved 18 December 2014. As of January 1, 1987, the federal government removed the full tax-exempt status of BCBS plans and instead created a special tax class for BCBS organizations, Internal Revenue Code ("I.R.C.") 5833. That I.R.C. category subjected BCBS plans to federal taxation but recognized the unique role BCBS plans play, unlike commercial for-profit insurers, and entitled it to special tax benefits. 
  9. ^ 26 USC § 833 – Treatment of Blue Cross and Blue Shield organizations, etc. | Title 26 – Internal Revenue Code | U.S. Code | LII / Legal Information Institute Retrieved on 2013-09-05.
  10. ^ "Blue Cross parent boosts profit in second quarter". Crain's Chicago Business. Crain Communication, Inc. 3 September 2013. Retrieved 18 December 2014. 
  11. ^ Robert Pear (14 December 2014). New York Times "In Final Spending Bill, Salty Food and Belching Cows Are Winners". NY times. Retrieved 18 December 2014. 
  12. ^ Health Insurance Facts | Smarter Consumers of Healthcare. Health Harbor. Retrieved on 2013-09-05.
  13. ^ United States Office of Personal Management, 2010 Nationwide Fee-for-Service Open to All
  14. ^ "Contact Us." Blue Cross and Blue Shield Association. Retrieved on December 23, 2009.
  15. ^ a b c d "Contact Us". Retrieved 10 February 2015. 
  16. ^ "Anthem Health Insurance, Medicare, and Group Health Plans". Very bottom of page. Retrieved 10 February 2015. 
  17. ^ "Florida Blue – New Name of BlueCross and BlueShield of Florida" (Press release). PRNewswire. April 2, 2012. Retrieved April 27, 2012. 
  18. ^ The Regence Group
  19. ^ Ostrom, Carol M. (February 8, 2012). "3 Big Health Insurers Stockpile $2.4 Billion As Rates Keep Rising". The Seattle Times. 

Further reading

External links