Blue Shield of California
| Company type | Mutual benefit corporation |
|---|---|
| Industry | Health insurance |
| Founded | 1939 |
| Founder | California Medical Association |
| Headquarters | Oakland, California , United States |
Area served | California |
| Products | Health insurance |
Blue Shield of California operates as a mutual benefit corporation and health insurance provider, established in 1939 by the California Medical Association. Its main office is located in Oakland, serving a membership base of 4.5 million along with more than 65,000 physicians throughout the state. Initially founded as a nonprofit organization, Blue Shield lost its California tax-exempt designation in 2014 and had been subject to federal taxation for several years prior.
History
Founded originally as California Physicians' Service by the California Medical Association in 1938 and officially incorporated in 1939, Blue Shield of California was integral to the creation of the National Association of Blue Shield Plans in 1946, which later became part of the Blue Cross and Blue Shield Association. By 1950, it introduced catastrophic insurance coverage and achieved a subscriber count of one million by 1961. The company maintained its headquarters at 50 Beale Street, San Francisco, from 1966 until its move to Oakland in 2018.
In 1984, Blue Shield began providing coverage for heart transplant procedures at Stanford University Medical Center. While Blue Cross of California transitioned to a public company under the name Wellpoint in 1992 (now Anthem), Blue Shield enhanced its digital capabilities by launching online benefits information in 1996 and implementing agent enrollment platforms by 1998. The acquisition of managed care provider CareAmerica occurred in 1997.
Regulatory challenges concerning risk tier adjustments and wrongful policy rescissions were resolved through settlements in 2006 and 2008, which included compensation and reinstatement of coverage for affected members.
In 2010, Blue Shield collaborated with Dignity Health and Hill Physicians Medical Group to create an Accountable Care Organization serving 41,000 CalPERS members, successfully lowering inpatient admissions and reducing healthcare expenses within two years.
Blue Shield expanded its Medicaid services by acquiring Care1st Health Plan in 2015. It divested Care1st Arizona to WellCare in 2017 and rebranded Care1st California as Blue Shield of California Promise Health Plan in 2019.
The launch of Altais in 2019 marked Blue Shield’s entry into supporting independent physician practices through a dedicated healthcare company, which subsequently acquired Brown & Tolland in San Francisco during 2020.
Network
The provider network managed by Blue Shield of California encompasses over 65,000 physicians and more than 340 hospitals across the state.
Financial
In 2011, Blue Shield committed to limiting its net income to no more than 2% of total revenue, contingent on board approval. By the year 2019, this commitment had resulted in over $600 million being returned to customers and community initiatives.
Following a state audit that questioned its eligibility for tax exemption, Blue Shield lost its corporate income tax-exempt status in California in 2014. Despite efforts to maintain this status, insufficient justification led to its reclassification as a nonprofit subject to taxation.
In fiscal year 2020, the organization reported revenues totaling $21.8 billion alongside net income amounting to $680 million, underscoring its substantial financial position within the healthcare sector.