The Blue Cross and Blue Shield Association first allowed a Blues plan to become for-profit in 1993. That plan was Blue Cross of California, which converted to for-profit status through an initial public offering of stock. The association gave the go-ahead primarily as a way to save its licensees from bankruptcy at a time when Blues plans were losing both money and members to better-capitalized HMOs. What followed, however, was a wave of mergers and conversions that changed the face of the insurance industry, particularly within the Blues system, traditionally a not-for-profit group of local plans created during the depression era to serve communities as the “insurer of last resort.” The transformation has been a mixed blessing, according to observers. While plans are better capitalized and financially stronger overall, some Blues plans have been harshly criticized for relinquishing their charitable mission and putting profits before patients.
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