January 23, 2002
Joy M. Grossman, Bradley C. Strunk
Blue Cross and Blue Shield (BCBS) plans collectively insure more than one in four Americans. Since the first BCBS was founded more than 70 years ago they have been local, not-for-profit plans. However, since the mid-1990s, BCBS plans increasingly have merged and converted to for-profit, publicly traded companies. In the last several years, three large BCBS players—Anthem, Wellpoint and Health Care Service Corp.—have aggressively pursued acquisitions.
These mergers and conversions typically receive a great deal of public scrutiny. Because of the Blues’ history as charitable organizations, when plans convert to for-profit status, state regulators and consumer advocates usually work to ensure charitable assets are transferred to a nonprofit entity within the state. Given the large market share of most local BCBS Plans, regulators and consumers advocates also are concerned about whether for-profit ownership will affect the accessibility and affordability of coverage in the community, particularly for hard-to-insure populations, and whether out-of-state ownership will lead to a loss of stability and local accountability.
HSC has been tracking the Blues in 12 urban markets across the U.S. since 1996. A chapter from Understanding Health System Change: Local Markets, National Trends titled "Blues Plans: Playing the Blues No More" is one of the only recent systematic studies of the Blues. The study examines how the Blues are faring in today’s competitive marketplace, the public benefit role they serve in communities and the strategic incentives plans have to merge with each other and undergo for-profit conversions. The chapter concludes with a discussion of the potential costs and benefits of these strategies for consumers in local communities and implications for public policy.
NOTE: Used with permission from Understanding Health System Change: Local Markets, National Trends edited by Paul B. Ginsburg and Cara S. Lesser. (Chicago: Health Administration Press, 2001) 37-60.
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