Blue Cross

“Group hospitalization schemes were prepayment plans, typically founded by strong administrators of voluntary hospitals or hospital councils, which offered subscribers the opportunity to receive specified hospital service, without cost at the time of need, for a small, ongoing monthly payment” (Stevens II, 183). Real control of the Plans usually lay in balance of power between the chief executive and a small number of dominant individual board members who took the most interest in Plan affairs. Over half of hospital board members were trustees, not administrators: “. . . although they had to be concerned with the financial health of the hospitals serving their members, the Blue Cross Plans, once they were weaned from hospital underwriting, developed a life, purpose, and interests of their own, independent of the hospitals that begat them. Nothing else could explain the increasing difficulty in settling questions about reimbursement of hospitals” (Cunningham, 64). . . . Eligibility for obstetrics usually began ten to twelve months after initial enrollment. Mental health was almost universally excluded, and coverage for chronic diseases was rare. . . . Structurally, the Blue Cross schemes were corporations founded by corporations (the voluntary hospitals) which responded to the needs of other corporations (employers). As a result Blue Cross was a ‘community’ scheme but not a ‘social-welfare’ scheme; notably, it excluded the unemployed, the elderly, and the disabled, as well as agricultural, domestic, and other ad hoc or part-time workers who had no affiliations with the organized workplace (Stevens II, 186). . . . the new prepayment schemes did not usually cover doctors’ fees, only the hospital’s basic services. They thus proclaimed, in effect, that hospitals were not ‘practicing medicine’ as medical corporations (since the financing excluded medical fees). Thus the hospital remained, formally at least, the practitioners’ workshop, not their employer, and there was no hidden agenda in the plans in favor of group practice or bureaucratic control over medical work” (187). . . . The organizational genius of Blue Cross was that it was a national movement whose strength derived from its ability to adapt to local conditions. It was, in short, both a radical and a conservative undertaking – radical in providing a new vehicle for hospital financing, but conservative in hewing to traditional relationships between hospitals and physicians at the very time that these were threatened” (188).