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Video transcript

I'm here with dr. Lawrence Baker from Stanford Medical School who's who specializes in healthcare policy and I I have of just a very basic question and that we see these you know BlueCross and BlueShield all of the time and sometimes they're used together sometimes are used differently and it just seems confusing to me what what are these things and how are they related to each other oh so they're they're related in some really interesting ways they go way back in time I'm so Blue Cross and Blue Shield began as separate things let's see if I can get this right Blue Shield started we started by doctors who wanted to set up a health care plan to help their patients get coverage for how kind of initiative a preventative shield to help you right right yes so that was started a long time ago these both go back Blue Cross and Blue Shield to the to the 1930 1930s really they're getting started Blue Cross was started by the hospitals separately from Blue Shield originally and they got together later as a way to help patients get coverage for hospital care so I guess across because you once you're in the hospital you might get a little religious exactly I mean not sure that's what they had in mind originally but and what about the blue I know where the blue color that makes people feel good it's like a health care color I think it must be a house red would be inappropriate let's go with blue and blue right you're not bleeding exactly look at this guy okay okay and so what happened so I I do see these words used together so these were separate plans doctors created the Blue Shield's hospitals created the Blue Cross and then they grew over time and changed so they got started in the 30s they were around through the 40s and the 50s 60s 70s and so a couple things happen along the way that starts to get 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 Blue Cross and the Blue Shield plans in different states grew up in different ways so what you come down to today is really different plans and in every state because of this history of development as states developed their laws differently the plans would evolve in the different states I just give myself a kind of framework what's happening is it pre 1920s early 1930s there were really weren't healthcare plans not the the physician said hey we want a way for people to see us without having to you know some way for them to maybe pain a little bit every month or every year and that if something were to happen they could see the doctors the hospitals kind of had the same model but they did it differently in every state because the state is the regulatory the state especially well in the 30s there weren't a lot of state regulations about health insurance there wasn't health insurance right as states evolved as the health care system evolved as the plans evolved it grew and grew separately in slightly different directions in every state so that led to the formation really of UC Blue Cross of Tennessee or Blue Shield of Florida or blue Blue Cross Blue Shield of Michigan they're all different because they're all in their own state environment and so it does is you know normally you you know these kind of our brands we've all heard of them in that way but normally a brand means something that it means the more quality or less quality but in in in or some type of spin on you know Apple means you know fun consumer experience or something like that but in this case it's I mean if I'm hearing you correctly if there's Blue Cross of California and Blue Cross of Texas they have nothing to do with each other or very little to do with each other so they've so they they all had their start kind of together and I season then they've all grown in their own ways but they've stayed related and some of them to greater extent than others and so one of the things that happened along the way was they formed an association there's now something in the u.s. called the Blue Cross Blue Shield Association which is a 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 this is an umbrella for all of the Blue Cross and all of the Blue Shield so that's what we hear I'm so used so frequently together it gives a Blue Cross Blue Shield yeah so there's two two reasons you hear that together one is the Association that tries to work with plants from both groups the other is that in some states over time the two got together and actually became one health insurance plans so there are states where the health insurance plan is Blue Cross and Blue Shield of a state and there are other states where they stayed separate so you know we're here in California where Blue Shield and Blue Cross have historically stayed as separate plans but there are some states where they're the same thing and then here BlueCross and BlueShield so if someone sales tells you blue cross of state X that just means to you health insurance plan there's nothing else that you can really take from that that so once upon a time you may have been able to take more from it but these days they're there it's possible for them to vary in quite a few different ways some of the Blue Cross and Blue Shield plans especially the Blue Cross plans have become for-profit plans so historically these were always nonprofit but in the cross especially some of them have gone for profit yes but I think in both cases but Blue Cross is the one that I pay more attention to right so 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 just because I've explained this all the time about even Kahn Academy not for profit and not-for-profit as an entity it can it can in theory charge revenue Kahn Academy doesn't but it could charge revenue but there's no owner of the organization who can kind of become rich off of it it's owned by the public while a for-profit has shareholders and and it can be bought and sold and and it can issue dividends and all the rest yeah so historically in America most health plans were not for profit entities they had they couldn't take money that they earned and give it out to maybe owners is that to be reinvested and in fact even in in the early days of Blue Cross and Blue Shield in some states they were treated as pot quasi-public right and raised and they've kind of grown away from that a bit more but there's a there's this history especially with Blue Cross and Blue Shield 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 owners and some are now publicly traded and their own stock actually trained and and so they would and so when we talk about some of them becoming for-profit here it's that literally the I don't know the license of the you name used the name either Blue Cross or Blue Shield or maybe some of the assets of the former not-for-profit are somehow transferred or I guess a for-profit buys them so we had a series of these things we called them conversions and yeah point 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 the situations in which they happen where the public the public the government somebody compelled the the for-profit entity in the conversion to create a public good so there are some foundations that now exist because in the conversion they allowed transfer mode not-for-profit to a 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 health care are conversion foundations around the for-profit conversions of privacy I see but when we sees things like I think it's I always get confused between Blue Cross music but I think I believe anthem is has a kind of you see here anthem with a blue Blue Cross and California so anthem is a company that is well it's a large company that has blue cross I think mostly Blue Cross are all Blue Cross affiliates or summarize in different states I think they're 14 or 15 so these are for-profit these are for-profit Blue Cross's if they have anthem with them I believe that's correct right right right and is there any I guess in how they operate from what from from a consumer point of view any difference between a for-profit Blue Cross or blue shield or anything that we can tell so that's actually 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's not a lot of evidence that they behave really differently you know at the end of the day they have to compete in the same marketplace for the business of the same companies the same people and if they behaved really obviously different if one was obviously way better than the other the market would sort out who's 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 and the the stated ideals of the people who run these organizations and that might make a difference in some cases but it's hard when you aggregate it all together and you really go try to do national date or something to find a big difference between so the big picture here is as much as I have you know I've looked at health care plans even when we're trying to figure out for employees at Khan Academy health care plan to choose in which nan and I've stared Oh what's the different blue cross and blue shield there's actually very little I can tell just by looking at those brands I would really have to dig deeper into the actual healthcare policy and that's going to be different from state to state it some will be for-profit some will be nonprofit even that's not enough to tell you a general rule of thumb you really just have to look at the healthcare plans you have to look at the healthcare plans and it's it's BlueCross and BlueShield but there's other villains out there there's Kaiser here there's at no and Cygnus other plans and they can vary from state to state and even within you can see variations so blue cross in California Blue Shield in California might offer some different types of choices so if you said I've got a really nice plan from Blue Cross and I look in another state and you look at a Blue Cross plan it might be that you're just looking at it less generous one where there is another one there you could look at so you even have to look within a company at the specifics of well I definitely want to go from state to state it would be weird to have brand loyalty to say well yeah you know Blue Cross they don't have this they have this history of being public spirited right even some of that persists to this day so maybe that's something to think about but in a general sense there are so many things that they could vary on that you'd want to be very careful with any choice you're making and and know that it could really vary across state lines interesting