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Private Non-commercial Insurance Providers

Blue Shield and Blue Cross, known as the Blues, are non-profit service organizations which offer pre-paid health and dental plans to millions of subscribers across the country. Each Blue Shield/Blue Cross organization is independently operated, but most are affiliated with the national Blue Shield and Blue Cross Association.

The Blues are service organizations rather than conventional insurance companies. They offer a wide range of prepaid medical, dental, vision, prescription drug and long term care insurance plans to individuals, families, organizations and employers. Subscribers pay a monthly fee and can use the services of the network of physicians, dentists, other healthcare providers and hospitals covered by their particular plan. The Blues have negotiated contracts with various health and dental providers with set fees for services, based on the typical cost of those services in that geographic area. The Blues pay the providers directly when a subscriber uses their services, rather than reimbursing the policyholder as is the usual case with an insurer. Blue Cross plans cover hospital costs, which depending on the plan can include: diagnostic testing, inpatient and outpatient services, medical emergencies, chemotherapy and pregnancy. Blue Shield plans pay for physicians, dentists and other medical and dental expenses. Subscribers can choose a variety of managed care plans: Health Maintenance Organizations (HMO), Point of Service (POS) and Preferred Provider Organizations (PPO) through the Blues.

Insurance plans with Blue Cross/Blue Shield are very flexible. A subscriber can transfer their membership to another Blues organization, even in another state, and continue their coverage without interruption. Subscribers can also switch back and forth between individual, family and group coverage as their needs change without disruption of service.

As non-profit organizations, any profits made by the Blues are returned to their subscribers as lower premiums or increased benefits. Many chambers of commerce and trade associations have contracts to sell insurance plans through the Blues.

Historically established as non-profit corporations to ensure that everyone had access to healthcare, many Blue Cross/Blue Shield organizations still run free medical clinics in the state where they are based, or offer heavily discounted comprehensive health and dental insurance to children of working families, who otherwise would not have health coverage. In many states the Blues are insurers of last resort, meaning that by law they have to sell insurance to all individuals who applied, even if they would have been considered uninsurable by other insurers.

This requirement has put financial pressure on Blues organizations, as they tend to lose their healthiest subscribers to “cherry picking” by commercial insurers who may be able to offer them lower premiums and are left with the subscribers with greater and more expensive healthcare needs. Over the last few decades many Blues organizations have converted from non-profit organizations to for-profit insurance companies.

However, in many states Blue Cross and Blue Shield organizations have a large market share of the health insurance market and offer a wide range of prepaid medical and dental plans to individuals, families and groups.