Blue Shield of California is a mutual benefit corporation and

health plan Health policy can be defined as the "decisions, plans, and actions that are undertaken to achieve specific healthcare goals within a society".World Health Organization''Health Policy'' accessed 22 March 2011(Web archive)/ref> According to the ...

founded in 1939 by the

California Medical Association The California Medical Association (CMA) is a professional organization based in California that advocates on behalf of nearly 50,000 physicians in legislative, legal, regulatory, economic, and social issues. The organization was founded in 1856 ...

. It is based in

Oakland Oakland is the largest city and the county seat of Alameda County, California, United States. A major West Coast port, Oakland is the largest city in the East Bay region of the San Francisco Bay Area, the third largest city overall in the Bay A ...

, California, and serves 4.5 million health plan members and more than 65,000 physicians across the state. Blue Shield of California was founded as a not-for-profit organization. As of 2014, it is no longer tax-exempt in California and has been paying federal taxes for several years before that.

History

Blue Shield of California, then known as California Physicians' Service, was created by the California Medical Association in 1938. The organization was incorporated in 1939 and began offering coverage on March 6 of that same year. In 1946, the organization was among the founders of the National Association of Blue Shield Plans, which later became the

Blue Cross and Blue Shield Association Blue Cross Blue Shield Association (BCBS, BCBSA) is a federation, or supraorganization, of, in 2022, 34 independent and locally operated BCBSA companies that provide health insurance in the United States to more than 106 million people. It was ...

. In 1950, the Blue Shield of California health plan began offering catastrophic coverage. By 1961, it had one million subscribers of its health plan. From 1966 to 2018, the organization was headquartered at 50 Beale Street in San Francisco. In 1984, it began covering

heart transplantation A heart transplant, or a cardiac transplant, is a surgical transplant procedure performed on patients with end-stage heart failure or severe coronary artery disease when other medical or surgical treatments have failed. , the most common procedu ...

s offered at Stanford University Medical Center. The Blue Cross of California, which traditionally covered the hospital portion of insurance as a separate entity, went public in 1992 under the name Wellpoint, with the name later changing to

Anthem An anthem is a musical composition of celebration, usually used as a symbol for a distinct group, particularly the national anthems of countries. Originally, and in music theory and religious contexts, it also refers more particularly to short ...

. Blue Shield began offering information on benefits and enrollment on the Internet in 1996, and offering an online enrollment system for agents in 1998. In 2006, Blue Shield agreed to a $6.5 million settlement relating to allegedly modifying the

risk In simple terms, risk is the possibility of something bad happening. Risk involves uncertainty about the effects/implications of an activity with respect to something that humans value (such as health, well-being, wealth, property or the environme ...

tier structure of its individual and family health care plans. In 2008, the organization settled for $3 million with the

California Department of Managed Health Care The Department of Managed Health Care (DMHC) is a regulatory body governing managed health care plans, sometimes referred to as Health Maintenance Organizations (HMOs) in California. The DMHC was created as the first state department in the countr ...

to resolve allegations of improper

rescission Rescission is the noun form of the verb "to rescind." It may refer to: * Rescission (contract law) * Rescission bill, a procedure to rescind previously appropriated funding in the United States * A synonym for repeal in parliamentary procedure * ...

of individual health plan coverage. Further, the organization reinstated coverage to 450 members whose plans had been canceled and agreed to provide compensation for any

medical debt Medical debt refers to debt incurred by individuals due to health care costs and related expenses. Medical debt is different from other forms of debt, because it is usually incurred accidentally or faultlessly. People do not plan to fall ill or ...

s incurred by these policyholders due to the rescission. In 2010, Blue Shield of California,

Dignity Health Dignity Health (formerly Catholic Healthcare West) was a California-based not-for-profit public-benefit corporation that operates hospitals and ancillary care facilities in three states. Dignity Health was the fifth-largest hospital system in th ...

, and Hill Physicians Medical Group formed an Accountable Care Organization that covers 41,000 individuals in the California Public Employees Retirement System (

CalPERS The California Public Employees' Retirement System (CalPERS) is an agency in the California executive branch that "manages pension and health benefits for more than 1.5 million California public employees, retirees, and their families".CalPERSFac ...

). During its first 2 years, this program reduced inpatient use and

health care costs Health, according to the World Health Organization, is "a state of complete physical, mental and social well-being and not merely the absence of disease and infirmity".World Health Organization. (2006)''Constitution of the World Health Organiza ...

significantly. In 2015, Blue Shield entered the

Medicaid Medicaid in the United States is a federal and state program that helps with healthcare costs for some people with limited income and resources. Medicaid also offers benefits not normally covered by Medicare, including nursing home care and pers ...

market by acquiring Care1st Health Plan. Blue Shield sold Care1st Arizona to

WellCare WellCare Health Plans, Inc. is an American health insurance company that provides managed care services primarily through Medicaid, Medicare Advantage and Medicare Prescription Drug plans for members across the United States. WellCare began ...

in 2017. Care1st California was renamed Blue Shield of California Promise Health Plan in 2019.

Network

Blue Shield of California's provider network currently includes 65,000 physicians and more than 340 hospitals statewide. 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.

Financial

In 2011, Blue Shield announced that it would cap its net income at no more than 2% of revenue, contingent on approval from the board of directors. As of 2019, more than $600 million has been returned to customers and the community a result of the pledge. In 2014, Blue Shield of California lost its exemption from California state corporate income tax. This information became public in March 2015. A claimed recent application of the duck test resulted in the denial of Blue Shield's tax-exempt status. This was after "a lengthy state audit that looked at the justification for Blue Shield's taxpayer subsidy." Blue Shield holds billions in cash reserves and spends millions in executive pay. The organization defended its tax-exempt status, but failed to provide sufficient evidence to

California Franchise Tax Board The California Franchise Tax Board (FTB) administers and collects state personal income tax and corporate franchise and income tax of California. It is part of the California Government Operations Agency. The board is composed of the Californi ...

that its actions align with such obligations. As a result, Blue Shield became a tax-paying nonprofit. In 2020, Blue Shield of California reported $21.8 billion in revenue and $680 million in net income.

References

External links

* {{Authority control Health insurance in the United States Insurance companies of the United States Members of Blue Cross Blue Shield Association American companies established in 1939 Financial services companies established in 1939 1939 establishments in California Companies based in San Francisco Medical and health organizations based in California