Blue Shield of California explained

Blue Shield of California
Type:Non-profit health plan (tax exempt status removed in 2014)[1] [2]
Founder:California Medical Association[3]
Key People:Paul Markovich,
President and chief executive
Industry:Healthcare
Revenue: $21.8 billion USD (2020)
Net Income: $680 million USD (2020)
Members: 4.5 million (2021)[4]
Num Employees:7,500 (2021)
Foundation:1938 (created)
1939 (incorporated)
Location:601 12th Street
Oakland, California

Blue Shield of California is a mutual benefit corporation and health plan[5] [6] founded in 1939 by the California Medical Association. It is based in Oakland, 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.[7] In 1950, the Blue Shield of California health plan began offering catastrophic coverage.[8] 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.[9]

In 1984, it began covering heart transplantations offered at Stanford University Medical Center.[10]

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.[11] 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 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 to resolve allegations of improper rescission 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 debts incurred by these policyholders due to the rescission.[12]

In 2010, Blue Shield of California, Dignity Health, and Hill Physicians Medical Group formed an Accountable Care Organization that covers 41,000 individuals in the California Public Employees Retirement System (CalPERS). During its first 2 years, this program reduced inpatient use and health care costs significantly.[13]

In 2015, Blue Shield entered the Medicaid market by acquiring Care1st Health Plan.[14] Blue Shield sold Care1st Arizona to WellCare in 2017. Care1st California was renamed Blue Shield of California Promise Health Plan in 2019.[15]

Network

Blue Shield of California's provider network currently includes 65,000 physicians[16] and more than 340 hospitals statewide.[17]

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.[18]

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.[19] As of 2019, more than $600 million has been returned to customers and the community as a result of the pledge.[20]

In 2014, Blue Shield of California lost its exemption from California state corporate income tax. This information became public in March 2015.[21] A claimed recent application of the duck test resulted in the denial of Blue Shield's tax-exempt status.[22] 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 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.[23]

Notes and References

  1. Web site: Mission and Values – Blue Shield of California. blueshieldca.com. March 17, 2016.
  2. Web site: With billions in the bank, Blue Shield of California loses its state tax-exempt status. Los Angeles Times. March 18, 2015 . September 1, 2016.
  3. Web site: Corporate History and Timeline – Blue Shield of California. blueshieldca.com. March 17, 2016.
  4. Web site: 2021. Fact sheet. live. Blue Shield of California. https://web.archive.org/web/20210512003139/https://s3.amazonaws.com/cms.ipressroom.com/347/files/20212/BlueShieldCA_Fact_Sheet_March+2021.pdf . May 12, 2021 .
  5. Web site: Young. Samantha. Hart. Angela. March 22, 2021. Newsom Awarded the No-Bid Vaccine Contract to Blue Shield, a Trusted and Generous Supporter. live. 2021-05-07. KQED. en-us. https://web.archive.org/web/20210323012250/https://www.kqed.org/science/1973320/newsom-awarded-the-no-bid-vaccine-contract-to-blue-shield-a-trusted-and-generous-supporter . March 23, 2021 .
  6. Web site: Terhune. Chad. 2015-06-06. Blue Shield faces more heat over nonprofit status, $1.2-billion deal. live. 2021-05-07. Los Angeles Times. en-US. https://web.archive.org/web/20150606011831/http://www.latimes.com/business/la-fi-blue-shield-nonprofit-20150605-story.html . June 6, 2015 .
  7. Web site: September 12, 2011. Corporate History and Timeline. live. May 3, 2021. Blue Shield of California. https://web.archive.org/web/20060322045851/https://www.blueshieldca.com/bsc/newsroom/newsroom_02.jhtml . March 22, 2006 .
  8. Book: Dickinson, Frank G.. Medical Care in Transition. 1964. U.S. Department of Health, Education, and Welfare, Public Health Service. Reprints from the American Journal of Public Health. 1. 103. en. 1012029666.
  9. News: Blue Shield to move headquarters from San Francisco to Oakland with massive lease . Roland . Li . . March 8, 2017.
  10. Evans. Roger W.. January 1987. The economics of heart transplantation.. Circulation. en. 75. 1. 73. 10.1161/01.CIR.75.1.63. 3098447 . free.
  11. Web site: Don't call us WellPoint, says newly named Anthem. Indianapolis Star. May 24, 2019.
  12. News: July 18, 2008. 2 health insurers to pay $13M to Calif. regulators. AP/Google. dead. July 18, 2008. https://web.archive.org/web/20080721053636/http://ap.google.com/article/ALeqM5gDBLyPh2QHiIO7azoVYF9Q2TVRSwD9203RSG2. July 21, 2008.
  13. Web site: Agency for Healthcare Research and Quality . Accountable Care Organization Featuring Shared Global Risk Stimulates Development of Initiatives To Improve Care, Reduces Inpatient Use and Costs . May 8, 2013 . May 9, 2013.
  14. Web site: Blue Shield of California Closes on Acquisition of Care1st, Enters Medi-Cal/Medicaid. Blue Shield.
  15. Web site: Care1st Health Plan Changing Its Name. L.A. Care Health Plan. June 21, 2019. December 13, 2018.
  16. Web site: Pena. Luz. March 3, 2021. Blue Shield CEO explains plan to increase CA's vaccine doses to 4M per week. live. April 30, 2021. ABC7 San Francisco. en. https://web.archive.org/web/20210303034249/https://abc7news.com/10384170/ . March 3, 2021 .
  17. Web site: June 2018. Fact Sheet. live. April 30, 2021. Blue Shield of California – News Center. https://web.archive.org/web/20191006022039/https://news.blueshieldca.com/internal_redirect/cms.ipressroom.com.s3.amazonaws.com/347/files/20185/Fact%20Sheet%20DRAFT04_graphical_201806201759.pdf . October 6, 2019 .
  18. http://www.opa.ca.gov/report_card/hmorating.aspx State of California – Health Care Quality Report Card 2009 Edition
  19. Web site: Brown. Steven E.F.. 2011-06-07. Blue Shield of California to limit profit to 2% of revenue. live. 2021-05-07. San Francisco Business Times. https://web.archive.org/web/20110610165344/http://www.bizjournals.com:80/sanfrancisco/news/2011/06/07/blue-shield-of-california-to-limit.html? . June 10, 2011 .
  20. Web site: 2020. Financials. live. May 7, 2021. Blue Shield of California. https://web.archive.org/web/20200418231232/https://www.blueshieldca.com/bsca/bsc/public/member/mp/contentpages/!ut/p/z1/tVFLc4IwEP4r9eCRyRIohCNaX0ytM1ar5sIkGCQdSBCjtv--wbG9VaeH5rSZ_Xb3eyCK1ogqdpI7ZqRWrLT_DQ1STCZkDOAmM8AAMYF-8hJFhIQhekMU0TqTW7TBgRv6goMTbrHr-BhCJ-KZ70SPImKZ4Dx3eYvOlKlNgTaVqLho0kwrI5RJherCtX5otDZdYFwfTcrLo0gPhRTltgU0tW6YEalUuW6qC88u5FIxlUlWHtDqHmNq2_DLiwEl9wDWEtxM-9Od1c1M4bRE0LrWmT1NL8M_x0eLvgfxaBB7Q7L0iO9fATe2byz9ME0IBJPeDJ7hlYQQPw3mvXiIMYxctDpJcUZL1Yov0esf7R9_C7xhkBUo3_d7Gtuo2jw-DFr_T1Z1VRHv06E8mJPzIi_KXafzBQ4jais!/dz/d5/L2dBISEvZ0FBIS9nQSEh/ . April 18, 2020 .
  21. Web site: Terhune. Chad. 2015-03-18. With billions in the bank, Blue Shield of California loses its state tax-exempt status. live. May 7, 2021. Los Angeles Times. https://web.archive.org/web/20150318173005/http://www.latimes.com/business/la-fi-blue-shield-california-20150318-story.html . March 18, 2015 .
  22. News: Seipel. Tracy. March 19, 2015. California drops hammer on Blue Shield tax-exempt status. San Jose Mercury News. March 19, 2015.
  23. Web site: 2020. Blue Shield of California Consolidated Financials. May 7, 2021. Blue Shield of California.

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