History of Blue Cross and Blue Shield

Blue Cross and Blue Shield developed separately, with Blue Cross plans providing coverage for hospital services, while Blue Shield covered physicians' services.
Blue Cross is a name used by an association of health insurance plans throughout the United States. Its predecessor was developed by Justin Ford Kimball in 1929, while he was vice-president of Baylor University's health care facilities in Dallas, Texas. The first plan guaranteed teachers 21 days of hospital care for $6 a year, and was later extended to other employee groups in Dallas, and then nationally.The American Hospital Association (AHA) adopted the Blue Cross symbol in 1939 as the emblem for plans meeting certain standards. In 1960 the AHA commission was superseded by the Blue Cross Association. Affiliation with the AHA was severed in 1972.
The Blue Shield concept was developed at the beginning of the 20th century by employers in lumber and mining camps of the Pacific Northwest to provide medical care by paying monthly fees to medical service bureaus composed of groups of physicians. The first official Blue Shield Plan was founded in California in 1939. In 1948 the symbol was informally adopted by nine plans called the Associated Medical Care Plan, and was later renamed the National Association of Blue Shield Plans.
In 1982 Blue Shield merged with The Blue Cross Association to form the Blue Cross and Blue Shield Association.
Prior to the Tax Reform Act of 1986, organizations administering Blue Cross Blue Shield were tax exempt under 501(c)(4) as social welfare plans. However, the Tax Reform Act of 1986 revoked that exemption because the plans sold commercial-type insurance. They became 501(m) organizations, subject to federal taxation but entitled to "special tax benefits"[9] under IRC 833. In 1994, the Blue Cross Blue Shield Association changed to allow its licensees to be for-profit corporations Some plans[specify] are still considered not-for-profit at the state level.