Health insurance didn’t start out this way

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By Consumers Union on Wednesday, March 10th, 2010

We are a country that believes in the free market. If companies compete head to head, they will have to offer customers better service or better prices to survive. It often works that way. But health insurance hasn’t proven to be the best market for head to head competition. Rather than improving price and service, companies began to increase profits by picking the healthy and shedding the sick.

It didn’t start out that way.

BCBS plans started in the 1930s with a charitable mission as nonprofit charitable corporations. They took everyone and provided coverage at an affordable price. “Membership in a Blue Cross plan was practically a civic duty.” The “Blues” grew big and covered American families for two generations.

Then in 1994 the trade association for Blue Cross Blue Shield plans changed its rules to allow plans to become for-profit corporations. California’s Blue Cross was the first plan to jump into the for-profit ring, becoming WellPoint. In 2004, Wellpoint and Anthem merged to become the largest health insurance company in the country.

Today, Wellpoint reports huge profits but to do that, it abandoned its original mission of providing health insurance to all at an affordable price. A loss to California and the nation.

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