Blue Cross Blue Shield Health Insurance Review

Blue Cross Blue Shield medical care coverage is one of the oldest health-insurance providers in the country. However Blue Cross Blue Shield is not a single company but a collective organization of 39 separate companies, most grouped by state, serving the needs of over 100 million patients.

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Blue Cross was founded in 1929 to provide health insurance coverage only for hospital services. The very first Blue Cross policy was sold to teachers for $6 per year and guaranteed 21 days of hospital care. This idea was broached by the then-president of Baylor College, who saw a need to offer affordable hospital coverage to those who often could not afford it.

Blue Shield, which was developed to insure the cost of physician services, was founded in 1939 to provide healthcare to miners and lumber workers. The two companies merged in 1982 to create an umbrella company for the Blue Cross Blue Shield affiliates. Prior to this, each Blue Cross and Blue Shield company operated with complete independence, often resulting in confusion for customers.

Until 1986, the company operated as a non-profit corporation under Section 501(c)(4) of the Internal Revenue Code. This is because the companies were classed as serving “social welfare.” However, with a 1986 reform of Income Tax Act, that status was revoked and the company became strictly commercial in nature. However, there are still some branches that operate as non-profit organizations under Section 501(m) of the tax code for state income tax, if they meet certain requirements.

Where does Blue Cross Blue Shield offer health Insurance coverage?

Blue Cross and Blue Shield organizations, which are independent entities under the auspices of the umbrella of BCBS, offer various types of medical insurance nationwide. Blue Cross and Blue Shield are also administrators of the federal government’s Medicare program for senior citizen health in many areas and administers many federal and state employee benefit plans.

The relationship between the various Blue Cross entities is not always smooth. In Idaho, Blue Cross of Idaho and Blue Shield of Idaho actually compete for clients. In Pennsylvania, the various Blue Cross affiliates have a joint marketing agreement, even though both Blue Cross companies provide managed-care, effectively making them competitors for the same market.

Many Blue Cross and Blue Shield plans are administered as HMOs (Health Maintenance Organizations) or PPOs (Preferred Provider Organizations). In this way, the company is able to keep costs relatively low and control a large portion of the health care systems in the various states in which it operates. In fact, it is highly unlikely that any company, no matter how large, could survive at this point without some form of managed care, as healthcare costs have continued to skyrocket and the number of patients seeking treatment for health complaints continues to grow.

Although finding a bottom line for the company’s overall net worth is difficult due to the complex structure of the affiliation, individual companies are, for the most part, solvent and continue to make profits, even in the down-turned market and with the threat of universal healthcare looming. For example, in California, Standard & Poor’s gave the California BCBS affiliate, Blue Cross of California, an A (Excellent) financial rating. This company is classified as a non-profit, and pledges to return any profit over 2% to its customers in the form of premium rebates, or to the community in the form of subsidized health care.

Each Blue Cross and Blue Shield affiliate is operated slightly differently, and in order to find out about options for your location, you should be aware that more than one Blue Cross associate organization may be operating in your territory. If you are considering Blue Cross insurance, talk to a health insurance agent about your options, and do a bit of research to find out which company will best meet your needs. Keep in mind that many Blue Cross Blue Shield affiliates operate only as HMOs or PPOs, though some offer choices of plans.

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