Health Care System
Blue Cross and Blue Shield Sal and Dr. Baker talk a bit about Blue Cross and Blue Shield
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- I am here with Dr. Lawrence Baker
- from Stanford Medical School,
- who specializes in healthcare policy,
- and I have just a very basic question:
- and that is we see these BlueCross and BlueShield
- all of the time and sometimes are used together.
- Sometimes are used differently.
- This seems confusing to me.
- What are these things
- and how are they related to each other?
- Dr. Baker: They're related in some really interesting ways.
- They go way back in time ...
- So BlueCross and BlueShield began as separate things.
- Let's see if I can get this right.
- BlueShield was started by doctors
- who wanted to set up a Healthcare plan
- and to help their patients get coverage for healthcare
- (Sal Khan: preventive shields - right right).
- So that was started longtime ago:
- these both go back BlueShield and BlueCross
- to the 1930s really they're getting started.
- BlueCross was started by the hospitals
- separately from BlueShield originally.
- They get together later as a way
- to help patients to get coverage for hospital care.
- Sal: I guess the cross is because once you're in the hospital
- you might get a little religious.
- Dr. Baker: Exactly! I mean not sure
- if that's why they had in mind originally but...
- Sal: But what about the BLUE?
- Dr. Baker: I don't know where the BLUE comes from.
- Sal: Is that just the color that makes people feel good?
- It's like a healthcare color?
- Dr. Baker: think it must be healthcare color.
- Sal: Red would be inappropriate.
- Dr. Baker: Let's go with blue. Blue is.. you're not bleeding.
- Sal: Exactly! Blue is...you look at the sky. OK!
- What happens I do see these words used together.
- So these were separate plans?
- Doctors created the BlueShield,
- Hospitals created the BlueCross.
- Dr. Baker: and then they grew over time and changed.
- So they got started in the 30s,
- they were..around through the 40s, 50s, 60s, 70s..
- and so a couple of things happened along the way
- that starts to make things confusing a little bit.
- One is that they're operating in every state,
- to some extent independently.
- So states regulate health insurance in this country or..
- have a lot to do with regulating health insurance in this country.
- And so every state had its own laws and as a result..
- the BlueCross and the BlueShield plans in different states
- grew up in different ways.
- So what you come down to today is really different plans..
- in every state because of this history of development.
- As states developed their laws differently,
- the plans would evolve in the different states separately.
- Sal: I see, just to give myself a kind of framework of
- what was happening is in the pre 1920s, early 1930s:
- there were not really weren't healthcare plans,
- the physicians say, hey we want people to have a way
- for people to see us without having to, you know,
- someway for them to be paying a little bit every month
- or every year and that is,
- if something would happen, they can see the doctors.
- The hospitals kind of have the same model but
- they did it differently in every state,
- because the state is the regulatory.
- Dr. Baker: The state, especially in the 1930s,
- there weren't a lot of state regulations
- about the health insurance.
- There wasn't health insurance. But as states evolved,
- as their healthcare system evolved, as their plans evolved,
- it grew separately
- in slightly different directions in every state.
- So that led to the formation- really of you see..
- BlueCross of Tennessee or BlueShield of Florida,
- BlueCross/BlueShield of Michigan.
- They are all different
- because they are all in their own state environment.
- Sal: So this is normally these kinds of brands,
- we all have heard of them in that way.
- But normally a brand means something.
- It means more quality or less quality.
- But in...or some type of spin on....you know
- Apple means fun consumer experience
- or something like that.
- But in this case - if I'm hearing you correctly
- If there's BlueCross of California and BlueCross of Texas:
- they have nothing to do with each other
- or very little to do with each other?
- Dr. Baker: So they all had their start kind of together in the 30s,
- and then they've all grown in their own ways.
- But they've stayed related and
- some of them to greater extents than others.
- So one of the things that happened, along the way,
- was that they formed an association.
- There's now something in the US called
- the BlueCross/BlueShield Association.
- Which is - I guess -
- an association of a lot of the plans in different states
- that allows them to talk to each other,
- to try to work together.
- Sal: This is an umbrella
- for all of the BlueCross and all of the BlueShield.
- So that's why we hear them used so frequently together,
- people say: BlueCross/BlueShield.
- Dr. Baker: Yeah, so there are 2 reasons
- that you hear that together.
- One is the Association that tries
- to work with plans from both groups.
- The other is that in some states, over time,
- the 2 got together
- and actually became 1 health insurance plan.
- So there are states where the health insurance plan
- is BlueCross and BlueShield of a state.
- And there are other states where they stayed separate.
- So, we're here in California
- where BlueShield and BlueCross
- have historically stayed as separate plans.
- But there are some states where they're the same thing
- and then you hear BlueCross and BlueShield.
- Sal: So if someone tells you BlueCross of State X,
- that just means to you Health Insurance Plan.
- There is nothing else that you can really take from that.
- Dr. Baker: So once upon a time,
- you may have been able to take more from it.
- But these days...
- it's possible for them to vary in quite a few different ways.
- Some of the BlueCross and BlueShield plans -
- especially the BlueCross plans
- have become 'for-profit' plans.
- So historically these were always non-profit, but in the last..
- Sal: So, BlueCross especially:
- some of them have gone for-profit?
- Dr. Baker: Yes, but I think in both cases.
- But BlueCross is the one that I pay more attention to.
- Sal: Right.
- Dr. Baker: So they may be for-profit or not-for-profit plans.
- They may act in similar ways,
- and they do because the Association
- - at least the ones in the Association -
- tend to act with some similarity from place to place.
- Sal: and just to - because I've explained this all the time -
- about even Khan Academy is a not-for-profit.
- A not-for-profit is an entity, it can in theory charge revenue.
- Khan Academy doesn't. But it could charge revenue
- but there is no owner of the organization
- who can, kind of, become rich off of it.
- It is owned by the public.
- While for-profit has shareholders
- and it can be bought and sold
- and issue dividends and all the rest.
- Dr. Baker: Yes, so historically in America,
- most healthcare plans were not-for-profit entities.
- They couldn't take money that they earned and
- give it out to people who might be the owners
- - it had to be reinvested.
- In fact even in the early days of BlueCross and BlueShield
- in some states they were treated as quasi public entities,
- and they've kind of grown away from that a bit more.
- But there's this history,
- especially with BlueCross and BlueShield,
- a very not-for-profit public spirited entities.
- When you get to for-profit plans,
- which we really didn't have in the US in a big way
- until maybe the last decade or two.
- Where we've seen some conversions,
- these are situations where the plan can act explicitly
- as a profit generator for its shareholders, for its owners.
- Sal: Right and some are now publicly traded
- and they're on the stock exchange.
- And so when we talk about some of them
- becoming for-profit here,
- it's that, literally, the license to use the name
- either BlueCross or BlueShield,
- or maybe some of the assets of the former not-for-profit
- are somehow transferred.. or,
- I guess, the for-profit buys them.
- Dr. Baker: So we had a series of these things.
- We call them conversions:
- when the company converted
- from being a not-for-profit to a for-profit.
- There were a lot of states in which
- those conversions, or situations in which they happen,
- where the public - the government -
- somebody compelled the for-profit entity
- in the conversion to create a public good.
- So there are some foundations that now exist but..
- Sal: Oh, I see.
- Dr. Baker: In the conversion,
- they allowed a transfer of not-for-profit to for-profit
- but you had to create something valuable for the public.
- So some of the things that we see now in states:
- some of the big foundations that exist in healthcare
- are conversion foundations
- around the for-profit conversions of..
- Sal: I see. But, when we see things like,
- I always get confused between BlueCross and BlueShield,
- but I believe that Anthem has a Blue...
- Dr. Baker: BlueCross in California.
- So Anthem is a company that is - well
- it is a large company that has BlueCross,
- I think mostly BlueCross or all BlueCross,
- affiliates or sub-entities in different states.
- I think that they have 14 or 15.
- Sal: Right, so these are for-profit BlueCrosses,
- if they have Anthem with them?
- Dr. Baker: I believe that's correct.
- Sal: Right, right.
- And, is there any, I guess how they operate,
- from a consumer point of view, any difference
- between a for-profit BlueCross or BlueShield?
- Anything that we can tell?
- Dr. Baker: So that's a really interesting question.
- There are people who've gone to look and
- they've tried to, sometimes,
- find some evidence for differences.
- There are a few studies out there where
- people can find some differences but
- there is not a lot of evidence
- that they behave really differently.
- At the end of the day,
- they have to compete in the same market place
- for the business of the same companies, the same people.
- And if they behave really obviously different:
- if one was obviously way better than the other,
- the market would sort out who is going to win this.
- And the market has allowed both types to exist.
- So, there are certainly differences
- in the written charters and
- maybe differences in the preferences in the stated ideals
- of the people who run these organizations
- and that might make a difference in some cases.
- But it is hard when you aggregate it all together and
- you really go try to do national data or something
- to find a big difference.
- Sal: So the big picture here is,
- as much as I've looked at healthcare plans even when
- we're trying to figure out for employees at Khan Academy,
- which healthcare plan to choose and which not.
- And I've thought: Oh,
- what's the difference between BlueCross and BlueShied?
- There's actually very little that I can tell
- just by looking at those brands.
- I really have to dig deeper
- into the actually healthcare policy.
- That's going to be different from state to state.
- Some will be for-profit, some will be not-for-profit,
- and even that's not enough to tell you.
- General rule of thumb:
- you really have to look at the healthcare plans.
- Dr. Baker: You have to look at the healthcare plans
- and it's BlueCross and BlueShield, but
- there's other plans out there.
- There's Kaiser around here.
- There's Aetna and Cigna and other plans.
- And they can vary from state to state and
- even within, you can see variations.
- So BlueCross in California or BlueShield in California
- might offer some different types of choices.
- So if you said that I've got a really nice plan from BlueCross
- and I look at another state and you look at a BlueCross plan
- it might be that you're just looking at a less generous one,
- where there is another you could look at.
- So you even need to look within a company at the specifics.
- Sal: Definitely when we go from state to state,
- it would be weird to have brand loyalty.
- Dr. Baker: Yeah, BlueCross and BlueShield have
- this history of being public spirited entities
- and some of that persists to this day.
- Maybe that is something to think about but
- in a general sense,
- there are so many things that they can vary on
- that you'd want to be very careful
- with any choice you're making
- and know that it can really vary across state lines.
- Sal: Interesting.
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