(BCBS) Blue Cross and Blue Shield is the oldest and largest payer group in the U.S., consisting of 36 independent, locally operated franchises that collectively make up the Blue Cross Blue Shield Association, providing health insurance in the United States to more than 106 million people. Blue Cross was founded in 1929 and became the Blue Cross Association in 1960, while Blue Shield emerged in 1939 and the Blue Shield Association was created in 1948. The two organizations merged in 1982.



Blue Shield was developed 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.  In 1939, the first official Blue Shield plan was founded in California. 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 the 1960s the U.S. government chose to partner with Blue Cross and Blue Shield companies to administer Medicare.

Blue Shield merged with The Blue Cross Association to form the Blue Cross and Blue Shield Association (BCBS) In 1982.

Prior to 1986, organizations administering BCBS were tax exempt under 501(c) as social welfare plans. However, the Tax Reform Act of 1986 revoked the exemption, because the plans sold commercial-type insurance. They became 501(m) organizations, subject to federal taxation, but entitled to “special tax benefits” under IRC 833.

In 1994, BCBS changed to allow its licensees to be for-profit corporations. During 2010, Health Care Service Corporation, the parent company of BCBS in Texas, Oklahoma, New Mexico, Montana, and Illinois, nearly doubled its income to $1.09 billion in 2010 and began four years of billion-dollar profits.  In the final spending bill for FY 2015 after much lobbying since 2010, nonprofit Blue Cross and Blue Shield plans continue to have special tax breaks that were understood to be threatened by the Affordable Care Act of 2010.


Current organization

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 U.S. [12] and provide coverage to state government employees as well as to the federal government employees under a nationwide option of the Federal Employees Health Benefits Program.

The association has its headquarters in the Michigan Plaza complex in the Chicago Loop area of Chicago, Illinois.

Read: Health Insurance Penalty

Things to know about Blue Cross Blue Shield

Here are things to have in mind about blue cross blue shield

  1. Blue Cross was founded in 1929 as a way to provide prepaid hospital care. A decade later, Blue Shield was founded to provide reimbursement for physician services. The Blue Cross Association and National Association of Blue Shield Plans merged in 1982 to form the Blue Cross and Blue Shield Association.


  1. One in three Americans — 106 million — are BCBS beneficiaries. BCBS companies also hold the largest privately underwritten health insurance contract in the world through the Federal Employee Program, or the Federal Employee Health Benefits Program, which insures more than half — 5.3 million — of federal government employees, dependents and retirees, according to the payer. BCBS provides 52 million Medicaid and 42 million Medicare beneficiaries with healthcare coverage as well.


  1. BCBS companies operate in every U.S. state, the District of Columbia and Puerto Rico.


  1. The Blues are entirely independent and license one or both of Blue Cross and Blue Shield’s brands to operate in distinct markets across the country. Of the 36 BCBS companies, the largest is the publicly-traded Anthem , which stretches across 14 states, and includes Rocky Mountain Hospital and Medical Service (Colorado and Nevada), Anthem Health Plans (Connecticut), BCBS of Georgia, BCBS Healthcare Plan of Georgia, Anthem Insurance Companies (Indiana), Anthem Health Plans of Kentucky, Anthem Health Plans of Maine, RightCHOICE Managed Care (Missouri), Healthy Alliance Life Insurance Co. (Missouri), HMO Missouri, Anthem Health Plans of New Hampshire, Community Insurance Co. (Ohio), Anthem Health Plans of Virginia, BCBS of Wisconsin.


  1. Chicago-based Health Care Service Corp., a BCBS licensee and the largest nonprofit health insurer in the country, posted a $281.9 million loss in 2014, compared to a $684.3 million surplus the year before, due to a significant increase in the number of medical claims as a result of the Patient Protection and Affordable Care Act and people gaining insurance coverage through the exchanges.


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  1. The nonprofit status of some Blues outfits has been a point of contention. While some companies are publicly traded, such as Anthem, others have maintained a nonprofit status. Blue Shield of California was stripped of its state tax-exempt status in August 2014, The California Franchise Tax Board revoked its status, which the payer has held since it was founded in 1939, after a state audit. Though no information has been released, the tax-exempt status was likely removed because Blue Shield of California was holding $4.2 billion in its financial reserves, which is four times larger than BCBSA requires its members to hold to pay claims, according to NPR. The company has contributed $325 million to its charitable foundation in the last 10 years. Rankings, disputes, and news According to athenahealth’s annual PayerView report, the Blues have the strongest presence in the Top 10 Performers, with BCBS Washington Regence, BCBS Maryland, BCBS Louisiana, BCBS Pennsylvania Capital BlueCross, BCBS North Carolina, and BCBS North Carolina Blue Medicare holding six spots. Payers were ranked based on metrics such as days in accounts receivable, claim resolution rate, denial rate and more.
  2. BCBS plans were rated the No.1 plan for overall member satisfaction for the Heartland region — which includes Arkansas, Iowa, Kansas, Missouri, Nebraska and Oklahoma — and the Illinois-Indiana region, Ohio, New Hampshire, Pennsylvania and Texas, where it tied for No. 1 with UnitedHealthcare, according to the annual J.D. Power Member Health Plan Study. The study is based on consumer responses in six categories: coverage and benefits, provider choice, information, and communication, claims processing, cost and customer service.
  3. Pittsburgh-based UPMC and Highmark have been embroiled in a dispute since 2011 when the payer moved to acquire West Penn Allegheny Health System, UPMC’s biggest competitor. In response, UPMC decided not to renew its contract with the payer, forcing Highmark customers to seek care outside of the system or pay out-of-network fees. Most recently, a judge ordered UPMC to continue to provide in-network access to Highmark Medicare Advantage members until 2019, or the duration of the consent decree the companies entered into in June 2014.


In conclusion, The BCBS system offers a full spectrum of healthcare coverage, including coverage for large employer groups, small businesses and individuals, as well as Medicaid and Medicare plans.