Blue Cross Health Insurance – Securing your medical needs

2007-03-08 10:33:40

( Health )



Blue cross health insurance was started in the 1920’s by a group of Dallas teachers who made an agreement with Baylor University to allow 21 days of hospitalization for a fixed $6.00 payment. Prepayment plans with blue cross markings allowed subscribers to freely choose their physician and hospital.

The American Hospital Association (AHA) encouraged this pre-paid service plans especially during the Great Depression since both subscribers and hospitals were suffering from falling incomes. This set-up helped hospitals generate a steady income which prevented their collapse and embarrassment. Endowed funds at that time were the ones providing financial support to hospitals. But endowed funds are limited and once the coffers are empty, they have nowhere to turn to. Hence, this set-up became most welcome during that period.

Competition among hospitals during those period was through single-hospital plans. Hence community hospitals banded together to offer medical coverage and minimize competition among them. These plans under the patronage of AHA eventually joined together and became known as blue cross health insurance. It covered the plan holder’s hospital use, doctors fees and other medical expenses arising from sickness or injury. It was also AHA who designed the blue cross guidelines which reduced the price war among hospitals.

Blue cross health insurance also benefited from special state enabling legislation which allowed them to register as non-profit corporations. This gave them tax exemptions and freedom from regular insurance regulations. Blue cross plans were viewed as serving the best interest of society because low-income individuals were the ones who benefited from this arrangement.

The enabling legislation also freed blue cross plans from coughing up the required insurance reserve because plans were underwritten by hospitals. The hospitals were the ones who contracted the plans to provide medical services to plan holders. They also agreed that even during periods when plans lacked funds to provide reimbursement, they will not cease to continue their services.

As years passed, Blue cross health insurance was modified and plans targeting specific plan holders were developed and introduced in the market. Some of these plans are senior health insurance, group health insurance, personal health insurance, overseas health insurance, low income health insurance and group health insurance.


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