INTRODUCTION
Blue Cross And Blue Shield, network of companies that provide health insurance to people in the United States and Puerto Rico. The Blue Cross and Blue Shield Association, based in Chicago, Illinois, governs the various health insurance organizations that carry its name. Member health insurance companies are operated locally, but they must abide by standards established by the national association. Historically, Blue Cross and Blue Shield insurers have been nonprofit organizations that receive tax-exempt status.
More than 71 million people are members of Blue Cross and Blue Shield health insurance plans. Most Blue Cross and Blue Shield organizations negotiate contracts with local hospitals and physicians to offer services to individuals who have paid premiums (fees) individually or through their employers.
Blue Cross and Blue Shield health insurance plans offer a broad spectrum of coverage options, including fee-for-service plans (also known as indemnity plans) and managed care plans. Fee-for-service plans allow members to visit any doctor or hospital for medical services. Managed care plans require members to visit designated physicians and include health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point-of-service plans (POSs) (see Health Insurance: Types of Plans in the United States). Blue Cross and Blue Shield organizations also administer services for Medicare, a government program that provides coverage for elderly people and for people with certain disabilities
MERGER OF BLUE CROSS AND BLUE SHIELD
Originally, Blue Cross covered the cost of hospital care and Blue Shield paid for physician care, but both groups eventually covered all health-care costs. The two groups established similar policies in the health-care industry, and subsequently some Blue Cross and Blue Shield organizations began to merge in the late 1970s. In 1982 the National Association of Blue Shield Plans merged with the Blue Cross Association. The new group changed its name to the Blue Cross and Blue Shield Association.
A major shift in the health-care industry began in the mid-1980s, when many people switched from fee-for-service plans to managed care services. Managed care plans, which were first introduced in the 1970s, covered more health-care services than fee-for-service plans. Many employers started using managed care plans because they emphasized preventive care and were generally less expensive. To retain employer-sponsored groups, Blue Cross and Blue Shield organizations began offering more types of managed care plans.
RECENT DEVELOPMENTS
Throughout the 1990s Blue Cross and Blue Shield organizations faced financial difficulties due to the spread of for-profit health-care organizations. Blue Cross and Blue Shield chapters remained nonprofit groups that enrolled subscribers regardless of their individual risk of illness. Its competitors, which used experience rating, were able to recruit more members by charging lower premiums to people with a low risk of illness. Enrollment in Blue Cross and Blue Shield plans dropped drastically in the early 1990s, and many chapters closed.
In 1994 the Blue Cross and Blue Shield Association abolished its requirement that its member groups remain nonprofit organizations. In 1996 Blue Cross of California merged with a for-profit managed care company, WellPoint Health Networks, becoming the first chapter to relinquish its tax-exempt status. During the late 1990s a number of Blue Cross and Blue Shield chapters followed suit and merged with for-profit insurance providers or created new for-profit subsidiaries.
Blue Cross And Blue Shield, network of companies that provide health insurance to people in the United States and Puerto Rico. The Blue Cross and Blue Shield Association, based in Chicago, Illinois, governs the various health insurance organizations that carry its name. Member health insurance companies are operated locally, but they must abide by standards established by the national association. Historically, Blue Cross and Blue Shield insurers have been nonprofit organizations that receive tax-exempt status.
More than 71 million people are members of Blue Cross and Blue Shield health insurance plans. Most Blue Cross and Blue Shield organizations negotiate contracts with local hospitals and physicians to offer services to individuals who have paid premiums (fees) individually or through their employers.
Blue Cross and Blue Shield health insurance plans offer a broad spectrum of coverage options, including fee-for-service plans (also known as indemnity plans) and managed care plans. Fee-for-service plans allow members to visit any doctor or hospital for medical services. Managed care plans require members to visit designated physicians and include health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point-of-service plans (POSs) (see Health Insurance: Types of Plans in the United States). Blue Cross and Blue Shield organizations also administer services for Medicare, a government program that provides coverage for elderly people and for people with certain disabilities
MERGER OF BLUE CROSS AND BLUE SHIELD
Originally, Blue Cross covered the cost of hospital care and Blue Shield paid for physician care, but both groups eventually covered all health-care costs. The two groups established similar policies in the health-care industry, and subsequently some Blue Cross and Blue Shield organizations began to merge in the late 1970s. In 1982 the National Association of Blue Shield Plans merged with the Blue Cross Association. The new group changed its name to the Blue Cross and Blue Shield Association.
A major shift in the health-care industry began in the mid-1980s, when many people switched from fee-for-service plans to managed care services. Managed care plans, which were first introduced in the 1970s, covered more health-care services than fee-for-service plans. Many employers started using managed care plans because they emphasized preventive care and were generally less expensive. To retain employer-sponsored groups, Blue Cross and Blue Shield organizations began offering more types of managed care plans.
RECENT DEVELOPMENTS
Throughout the 1990s Blue Cross and Blue Shield organizations faced financial difficulties due to the spread of for-profit health-care organizations. Blue Cross and Blue Shield chapters remained nonprofit groups that enrolled subscribers regardless of their individual risk of illness. Its competitors, which used experience rating, were able to recruit more members by charging lower premiums to people with a low risk of illness. Enrollment in Blue Cross and Blue Shield plans dropped drastically in the early 1990s, and many chapters closed.
In 1994 the Blue Cross and Blue Shield Association abolished its requirement that its member groups remain nonprofit organizations. In 1996 Blue Cross of California merged with a for-profit managed care company, WellPoint Health Networks, becoming the first chapter to relinquish its tax-exempt status. During the late 1990s a number of Blue Cross and Blue Shield chapters followed suit and merged with for-profit insurance providers or created new for-profit subsidiaries.
