Health insurance from invention to innovation: A history of the Blue Cross and Blue Shield companies

Published November 11, 2012

Health insurance didn’t always exist.

Health insurance from invention to innovation: A history of the Blue Cross and Blue Shield companiesLet that notion sink in for a moment as you try to imagine a world without health insurance. How could ordinary Americans afford healthcare? Who would help doctors and hospitals finance viable practices that provide care and advance medical innovation? How could our society function and prosper without access to quality medical care?

Health insurance began to answer those questions a century ago. By pooling the resources of a local community, the power of everyone’s premiums together could afford to pay for the individual members’ care when needed. It’s a simple concept with enormous benefits.

Beyond the economic relief of being able to afford the healthcare we need, having health insurance is often the difference between living one’s life with a feeling of security versus tempting fate on a daily basis. Health insurance is a cornerstone of a family’s economic stability. For most of us, having health insurance gives us the confidence to live our lives free of worry.

For more than 80 years, Blue Cross and Blue Shield companies have worked alongside local physicians and hospitals to deliver better quality and more affordable care in local communities nationwide. The Blue Cross and Blue Shield Association (BCBSA) will continue the work started at the turn of the last century, when Blue Cross and Blue Shield companies first pioneered the concept of health insurance. At that time, health insurance was a completely innovative approach to one of American society’s most dire concerns—how to provide and help manage care for people, while ensuring that there are enough resources to advance medical technology, develop more effective care solutions and sustain practitioner competency and safety?

Continuing that proud tradition, Blue Cross and Blue Shield companies are committed to better health and better healthcare value. Getting you healthy and keeping you healthy matters to us, but helping you when you’re not is our mission. Blue Cross and Blue Shield companies give you the tools and information you need so you can get the right care at the right time, invest in their local communities and work closely with doctors and hospitals, to develop innovative solutions that help improve healthcare quality and affordability for our members.

The work we are doing today is as important as the work we began decades ago. Below are milestones in the history of Blue Cross and Blue Shield companies:

  • 1910: Early forerunners of Blue health insurance plans appeared as pre-paid group practices. Plan members paid a monthly premium and received a wide range of medical services through an exclusive group of providers.
  • 1929: Blue Cross Plans are established to provide pre-paid hospital care, based on a prototype developed at Baylor University in Dallas, Texas by Justin Ford Kimball. In just 10 years, enrollment in these plans will grow from just more than 1,300 covered lives to 3 million. E.A. van Steenwyk, executive secretary with the forerunner to Blue Cross and Blue Shield of Minnesota, identified his hospital care program with a solid blue Greek cross design. The symbol began to show up in other parts of the country and soon, as one historian has written, the Blue Cross “perpetuated itself as a unifying force” among the newly emerging Plans.
  • 1930: Blue Shield Plans begin providing reimbursement for physician services. The Blue Shield symbol was devised in Buffalo, New York. Carl Metzger, an early pioneer in the Blue movement, wanted a company brand logo that would distinguish the new medical service plan. He also wanted to make sure that there was an obvious link to the companion hospital plan. It soon flourished among the growing number of Blue Shield Plans.
  • 1935: The National Labor Relations Act was the catalyst for employer-based health insurance, as it was now seen as an effective and valuable benefit to workers. Blue Cross and Blue Shield companies begin to empower more working Americans to access the healthcare system, some for the first time in their lives.
  • 1955: The spread of health insurance coverage – from less than 10 percent of the population having coverage in 1940 – grows to nearly 70 percent. The Blue Cross and Blue Shield logos become ubiquitous icons in both homes and medical offices across America.
  • 1960s: Medicare and Medicaid are enacted, and the government selects Blue Cross and Blue Shield companies to team up with and successfully administer the Medicare program. In 1964, more than 19 million individuals enroll under the new Medicare legislation.  Today Blue Cross and Blue Shield companies are instrumental in providing services to over 52 million Medicaid and 42 million Medicare participants.  Congress also enacted the Federal Employees Health Benefits Act, and The Blues responded with the creation of our Federal Employee Health Benefit Program. Today, this program covers more than 4.8 million federal employees, retirees and their families.
  • 1973: The Healthcare Maintenance Organization (HMO) Act of 1973 was specifically designed to reduce the cost of healthcare by increasing competition in the market and increasing access to coverage for individuals. Amendments to the HMO Act from 1976-1996 enabled Blue Cross and Blue Shield companies to increase the emphasis on quality care and accountability, improving efficiencies in how healthcare money was being spent (an HMO requires you to obtain a referral from a primary care physician to see a specialist and does not cover services outside your insurer’s network).
  • 1990s: The development of Preferred Provider Organizations (PPOs) and Point-Of-Service (POS) products allow Blue Cross and Blue Shield members more choices of who should provide their healthcare and flexibility to manage costs.
  • 1995: BlueCard is introduced, streamlining the administration of benefits for members who are traveling or living in another Plan’s service area, so they receive the same healthcare service benefits of their home Plan.
  • 1996: The Health Insurance Portability and Accountability Act (HIPPA) guarantees insurance portability and personal privacy for all Americans. Blue Cross and Blue Shield companies develop and pioneer new ways of working with health data that protects privacy, while discovering important trends that lead to innovations in care delivery management.
  • 1997 Children’s Health Insurance Program (CHIP): Working with the new funds provided by the US Department of Health and Human Services, Blue Cross and Blue Shield companies develop benefit solutions to bridge the gap that left millions of American children uninsured in families with incomes that are modest but too high to qualify for Medicaid.
  • 2003: Consumer Directed Health Plans (CDHP) begin to develop, enabling  Blue Cross and Blue Shield members to have more personal control over the amount they spend on their own healthcare. This starts a movement towards empowering individuals to be more actively involved in their healthcare decision-making.
  • 2010: The Patient Protection and Affordable Care Act (PPACA) is signed into law. Blue Cross and Blue Shield companies will continue to lead efforts on behalf of 100 million members, in local communities nationwide by partnering with doctors, nurses, hospitals and others to rein in costs, improve quality, help people stay well and better manage their care when they need it.
  • Today: Blue Cross and Blue Shield companies cover nearly one-in-three Americans, in every zip code in every state and Federal Territory.  The Blue Cross and Blue Shield companies are part of their local communities, making them accountable to their own neighbors, friends and families. You can find and connect with your local Blue Plan here:
  • 2013 and beyond: As the healthcare law is implemented, Blue Cross and Blue Shield companies will work to help build tomorrow’s healthcare system, clearing a pathway to high-quality, affordable care in America.

This blog, launching today, is a new approach for us in how we  communicate about the work we do to our members, our industry, the news media, policy makers and healthcare influencers. 

Stop by daily for the latest information on The Blues® , healthcare and how it all affects you—no matter who you are. Find member informationlinks to policy and healthcare developments happening in Washington, DC , the latest healthcare news , healthcare intelligence and research , healthcare social networking groups , and access to exclusive opportunities designed to help you live a healthier lifestyle .

The Blues invented health insurance. And we will continue to reinvent health insurance with the same spirit of innovation that has helped to improve the lives of generations of Americans. Now you can read about it as it happens, here at The Blue Cross and Blue Shield Blog.

The Blue Cross Blue Shield Association is an association of 35 independent, locally operated Blue Cross and/or Blue Shield companies.