Blue Cross Company Essay

Health Insurance
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The Company's History
Blue Cross and Blue Shield Association is currently the name of a federation that comprises of 37 health insurance companies that are independent. The two, Blue Cross (BC) and Blue Shield (BS) were originally separate entities with Blue Cross covering hospital charges and Blue shield paying for the services of physicians and the two merged in 1982. The Blue Cross plan was established in 1929 by an administrator from the Baylor University administrator to provide health insurance to teachers. In its original form, the insurance plan covered 21 days of hospital for $6 per year (Green & Hernandez, 2013). This was after $5 per day out of pocket for the first 10 days. Before Blue Cross, hospitals billed patients directly for all services provided. The advent of the economic depression revealed the fragility of the direct billing system because revenues for hospitals dropped since patients paid less of their bills and went hospitals run by government (Green & Hernandez, 2013).
To address these reduced payments, hospitals were anxious to bill the patients on a regular and advanced basis. They, in addition, sought to attract patients who would go to other hospitals for treatment. This plan provided direct benefits in form of hospital services. The system was similar to a prepayment plan as there were no reimbursements. Community-wide plans that charged a monthly fee were sponsored by the American Hospital Association (AHA) (Green & Hernandez, 2013). These promised that all hospitals that participated would provide such services. These community-wide plans became monopolies in the prepayment of hospitals with the AHA specifying the territories for each plan to avoid competition. The AHA lobbied for tax exemption for its plans. It, in addition, lobbied for regulations that favored control by the participating hospitals over the plans. These plans were collectively the Blue Cross ...