Blue Cross Blue Shield

BCBS

Blue Cross and Blue Shield is a national association that manages about 70 independent health care plans. The association owns the rights to the Blue Cross and Blue Shield name, trademarks, and licenses them to members. These association members either directly or indirectly provide insurance benefits to over 100 million people (Blue Cross Blue Shield Association, 2012). In American there are 68 million people directly enrolled Blue Cross and Blue Shield insurance plans. There are an additional 34 million people served by Blue Cross and Blue Shield by means of the association's function as contractors for Medicare (FundingUniverse.com). Thus, the "Blues" (as Blue Cross and Blue Shield are commonly collectively referred to) represent the largest health care providers in the United States and also have subsidiaries in the UK, Canada, and Jamaica.

The Blues provide its subscribers with an array of different types of plans. All of the Blues insurance plans are managed separately by the prospective providers; however each plan must satisfy the overall standards that are listed by the association. Nearly 90% of the Blues subscribers are members of group insurance plans and the rest (a little over 10%) are enrolled in individual plans. About 16 million subscribers obtain their health care by way of Preferred Provider Organizations (PPOs) that allow the person to their choice of a physician or hospital, but also offer a more attractive benefit package if the person chooses a physician or hospital from those that are "preferred" by their plan (in the plan's network of providers). Another 5.5 million Blues subscribers in 42 states partake of Health Maintenance Organizations (HMOs; FundingUniverse.com).

In 1929 Dr. Justin Ford Kimball, at the time the vice-president of Baylor University's health care department, is credited with being the originator of Blue Cross [6wikki]. Kimball observed that there were a large number of unpaid university hospital bills credited to a large group of local school teachers. This vexed him and he decided to organize a plan for teachers where they would be covered for a three-week hospital admission (but in a semiprivate room of course) if they paying about a six dollars a year in monthly fees in advance. This first plan was very attractive to prepaying as little as 50 cents a month or about six dollars per year. The first group health plan was immediately in place as nearly 1,250 teachers enrolled once the plan was made available (Blue Cross Blue Shield Association, 2012).

This plan was so popular that it was extended to people from other vocations in the Dallas, Texas area and then Illinois and Iowa developed similar plans. However, these nascent programs followed the example of the original program in Dallas by offering their benefits at only one particular hospital. This was awkward for many and in the early part of the 1930s certain plans, especially in New York and California, began to spring up that allowed the subscribers more of a choice regarding hospitals that would accept their coverage. The name and symbol for Blue Cross was developed in 1934 and by the next year, 1935, 11 states had Blue Cross plans. That same year the American Hospital Association (AHA) adopted the symbol for Blue Cross as an emblem for plans that met certain qualifications and also created the Committee on Hospital Services to watch over the rising number of new Blue Cross programs that were being developed on a nationwide basis. By the year 1938, there were 38 different Blue Cross plans in the United States that accounted for 1.4 million subscribers compared to a nationwide enrollment of only about 100,000 people in other private insurance companies (FundingUniverse.com). In 1960 AHA authority was taken over by the Blue Cross Association and Blue Cross' affiliation with the AHA was dissolved in 1972 (Blue Cross Blue Shield Association, 2012).

The Blue Shield concept was developed separately. Lumber and mining companies in the Pacific Northwest had started to develop programs to pay physicians a monthly fee in exchange for providing their employees with health care services in the early part of the 20th Century with the first of the plans appearing in 1917 in Tacoma, Washington. These plans served as models for later Blue Shield plans. In 1939 the first modern Blue Shield plan was developed in the state of California and was sculpted based on the earlier programs. This first California Blue Shield plan allowed subscribers to obtain services from a physician for the price of only $1.70 per month; however, it was only available for people whose income was under $3,000 a year (Blue Cross Blue Shield Association, 2012). Other states began to develop similar plans and in 1946 these nine plans joined together to form the Associated Medical Care Plans. This new association was supervised by the American Medical Association (AMA). Two years later the association took on the Blue Shield symbol becoming recognized as the Blue Shield Association

The programs grew rapidly with Blue Cross plan enrollments increasing from 6 million to 19 million between the years 1940-1945. Blue Shield enrollments were also high, near three million (FundingUniverse.com). When, in 1948 Blue Cross and Blue Shield decided to merge the AMA attempted to block the action based on the notion that this type of arrangement between doctors and hospitals would lead free trade restrictions. The two companies worked together while still remaining independent, setting up nonprofit agencies to manage the activities of their plans. The years saw them weather competition from other insurance providers and rising costs. These costs tripled between 1967 and 1981. In 1982, Blue Cross and Blue Shield finally merged the programs were coordinated by the Blue Cross and Blue Shield Association that was based in Chicago, Illinois (Blue Cross Blue Shield Association, 2012). However, the Blues had difficulties in the 1980s losing a significant number of subscribers and incurring deficits in the millions. In the 1990s some plans required financial bailouts by neighboring plans. But in the 1990s the program began to experience a comeback of sorts with the development of electronic claims processing (FundingUniverse.com).

In 1996 the Blues' membership was 37.5 million. In 1997 the Balanced Budget Act was ratified which added the Medicare + Choice program to existing programs allowing the Blues beneficiaries to choose additional types of health plans. This lead to the Blue's processing the majority of Medicare Claims by the year 2000. By 2003 the Blues' membership had rebounded to an all time high of 88 million. In 2004 the Blues association launched the Blue Worldwide Expat program which was a worldwide medical coverage program for expatriate workers in United States-based companies doing business abroad. Other programs were very successful in raising membership such as Blue Health Intelligence (BHI), designed to improve the quality of healthcare through sharing critical health information initially with employers, consumers, and providers and the Blue Distinctionsm program, which was a national program to provide healthcare transparency by enabling consumers to make better informed healthcare decisions and partnerships with providers, thereby improving patient quality outcomes and overall affordability. The Blues processed more than 194 million claim transactions in 2005 and hit the 100 million enrolment mark in (Blue Cross Blue Shield Association, 2012). Revenues topped over 320 million dollars and 2008 and the Blues employed over 880 employees.