Blue Cross Blue Shield Association

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This article is about American medical insurance companies. For other uses, see Blue Cross (disambiguation).
Blue Cross Blue Shield Association
Type Independent
Industry Health insurance
Founded 1929
Headquarters Michigan Plaza
Chicago, Illinois
Key people Scott Serota , President and CEO[1]
Products PPOs, HMOs
Revenue $320.5 million US$ (2008)[2]
Employees 880 (2008)[2]

The Blue Cross Blue Shield Association (BCBSA) is a federation of 37 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 created in 1948. The two organizations merged in 1982, forming the current association.


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, while Blue Shield covered 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, and 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 In 1960, the AHA commission was superseded by the Blue Cross Association. 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.[6] 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.[7]

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"[8] under IRC 833.[9] In 1994, the Blue Cross Blue Shield Association changed to allow its licensees to be for-profit corporations.[4] Some plans[specify] are still considered not-for-profit at the state level.

Current organization[edit]

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[10] 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.[11]

The 14-state WellPoint 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.[12]

Member companies[edit]

Details on specific organizations[edit]


BlueCross of Idaho and Regence[14] 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[edit]

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.[15] 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[edit]


  1. ^ Scott P. Serota page on BCBSA Web site
  2. ^ a b Blue Cross and Blue Shield Association Company Profile from Yahoo!
  3. ^ Blue Cross and Blue Shield Association – About Us
  4. ^ a b IRS. Coordinated Issue Paper – Blue Cross Blue Shield/Health Insurance; Life Insurance: Conversion of nonprofit corporations. (Effective Date: June 4, 2008)
  5. ^ a b Justin Ford Kimball from the Handbook of Texas Online. Retrieved August 31, 2009.
  6. ^ "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. 
  8. ^ "Blue Cross: 501(m)". Consumers Union. "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. The new I.R.C. category subjected BCBS plans to federal taxation but recognized the unique role BCBS plans play. Under I.R.C. 5833 the BCBS plans, unlike commercial for-profit insurers, are entitled 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. ^ Health Insurance Facts | Smarter Consumers of Healthcare. Health Harbor. Retrieved on 2013-09-05.
  11. ^ United States Office of Personal Management, 2010 Nationwide Fee-for-Service Open to All
  12. ^ "Contact Us." Blue Cross and Blue Shield Association. Retrieved on December 23, 2009.
  13. ^ "Florida Blue – New Name of BlueCross and BlueShield of Florida" (Press release). PRNewswire. April 2, 2012. Retrieved April 27, 2012. 
  14. ^ The Regence Group
  15. ^ Ostrom, Carol M. (February 8, 2012). "3 Big Health Insurers Stockpile $2.4 Billion As Rates Keep Rising". The Seattle Times. 

Further reading[edit]

External links[edit]