Blue Shield of California

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Blue Shield of California
Non-Profit Health Plan (tax exempt status removed in 2014)[1][2]
Industry Healthcare
Founded 1938 (created)[3]
1939 (incorporated)[3]
Founder California Medical Association[3]
Headquarters Blue Shield of California Building
San Francisco, California
Key people
Paul Markovich,
President and chief executive
Revenue Increase $17 billion USD (2014)[4]
Decrease $162 million USD (2014)[4]
Members 4 million [4]
Number of employees

Blue Shield of California is a health plan provider founded in 1939[3] and based in San Francisco, California. The organization serves over 4 million health plan members and nearly 65,000 physicians across the state.[5] Blue Shield of California was founded by the California Medical Association. Founded as a not-for-profit, Blue Shield of California was stripped of its tax-exempt status by the California Franchise Tax Board in 2014.


Blue Shield of California, then known as California Physicians' Service, was created by the California Medical Association on December 18, 1938,[6] and was incorporated on February 2, 1939. The organization began offering coverage on March 6 of that same year. In 1946, the organization was among a founder of the National Association of Blue Shield Plans, which later became the Blue Cross and Blue Shield Association. Today, Blue Shield of California is an independent licensee of the national association. The Blue Shield of California health plan was the first in the nation to offer catastrophic coverage in 1950, provide coverage for a heart transplant in 1984, offer online benefit and enrollment information in 1996, and offer an online enrollment system for agents in 1998. In 2006, the National Committee for Quality Assurance, commonly referred to as NCQA, recently recognized Blue Shield as an "excellent" health plan for service and clinical quality.[7]

In 2010, Blue Shield of California, Dignity Health, and Hill Physicians Medical Group formed an Accountable Care Organization that covers 41,000 individuals in the California Public Employees Retirement System (CalPERS). During its first 2 years, this program reduced inpatient use and health care costs significantly.[8]

In 2014, Blue Shield of California lost its exemption from California state corporate income tax but did not officially announce this information to the public until March 2015.[2] A claimed recent application of the duck test was the denial of tax-exempt "nonprofit" status to Blue Shield of California.[9]

In 2015, Blue Shield entered the Medicaid market by acquiring Care1st Health Plan.[10]


In 2006, Blue Shield agreed to a $6.5 million settlement relating to its alleged modifying of the risk tier structure of its individual and family health care plans. In 2008, the organization agreed to a settlement with the California Department of Managed Health Care to resolve allegations of improper rescission of individual health plan coverage. Blue Shield agreed to pay $3 million as a penalty. The organization reinstated coverage to 450 members whose plans had been cancelled and agreed to provide compensation for any medical debts incurred by these policyholders due to the rescission.[11]

Quality of care[edit]

In the California Healthcare Quality Report Card 2009 Edition, Blue Shield of California received 3 out of 4 stars in Meeting National Standards of Care and 2 out of 4 stars in How Members Rate Their HMO.[12]


  1. ^ "Mission and Values - Blue Shield of California". Retrieved 2016-03-17. 
  2. ^ a b "With billions in the bank, Blue Shield of California loses its state tax-exempt status". Los Angeles Times. Retrieved 2016-09-01. 
  3. ^ a b c d "Corporate History and Timeline - Blue Shield of California". Retrieved 2016-03-17. 
  4. ^ a b c "Financial Summary and Data - Blue Shield of California". Retrieved 2016-03-17. 
  5. ^ "Company Facts and Network Statistics - Blue Shield of California". 28 January 2016. 
  6. ^ "Corporate History and Timeline - Blue Shield of California". 12 September 2011. 
  7. ^ Retrieved August 30, 2008.  Missing or empty |title= (help)[dead link]
  8. ^ "Accountable Care Organization Featuring Shared Global Risk Stimulates Development of Initiatives To Improve Care, Reduces Inpatient Use and Costs". Agency for Healthcare Research and Quality. 2013-05-08. Retrieved 2013-05-09. 
  9. ^ Seipel, Tracy (March 19, 2015). "California drops hammer on Blue Shield tax-exempt status". San Jose Mercury News. Retrieved March 19, 2015. 
  10. ^ "Blue Shield of California Closes on Acquisition of Care1st, Enters Medi-Cal/Medicaid". Blue Shield. 
  11. ^ "2 health insurers to pay $13M to Calif. regulators". AP/Google. 2008-07-18. Archived from the original on 2008-07-21. Retrieved 2008-07-18. 
  12. ^ State of California - Health Care Quality Report Card 2009 Edition Archived July 19, 2011, at the Wayback Machine.

External links[edit]