1 00:00:00,280 --> 00:00:02,370 I am here with Dr. Lawrence Baker 2 00:00:02,370 --> 00:00:04,004 from Stanford Medical School, 3 00:00:04,004 --> 00:00:06,067 who specializes in healthcare policy, 4 00:00:06,067 --> 00:00:08,638 and I have just a very basic question: 5 00:00:08,638 --> 00:00:11,885 and that is we see these BlueCross and BlueShield 6 00:00:11,885 --> 00:00:13,624 all of the time and sometimes are used together. 7 00:00:13,624 --> 00:00:15,006 Sometimes are used differently. 8 00:00:15,006 --> 00:00:16,608 This seems confusing to me. 9 00:00:16,608 --> 00:00:18,137 What are these things 10 00:00:18,137 --> 00:00:19,666 and how are they related to each other? 11 00:00:19,666 --> 00:00:22,200 Dr. Baker: They're related in some really interesting ways. 12 00:00:22,200 --> 00:00:24,616 They go way back in time ... 13 00:00:24,616 --> 00:00:27,982 So BlueCross and BlueShield began as separate things. 14 00:00:27,982 --> 00:00:28,967 Let's see if I can get this right. 15 00:00:28,967 --> 00:00:31,166 BlueShield was started by doctors 16 00:00:31,166 --> 00:00:33,366 who wanted to set up a Healthcare plan 17 00:00:33,366 --> 00:00:36,898 and to help their patients get coverage for healthcare 18 00:00:36,898 --> 00:00:40,846 (Sal Khan: preventive shields - right right). 19 00:00:40,846 --> 00:00:43,214 So that was started longtime ago: 20 00:00:43,214 --> 00:00:44,886 these both go back BlueShield and BlueCross 21 00:00:44,886 --> 00:00:48,601 to the 1930s really they're getting started. 22 00:00:48,601 --> 00:00:51,457 BlueCross was started by the hospitals 23 00:00:51,457 --> 00:00:54,033 separately from BlueShield originally. 24 00:00:54,033 --> 00:00:55,660 They get together later as a way 25 00:00:55,660 --> 00:00:58,168 to help patients to get coverage for hospital care. 26 00:00:58,168 --> 00:01:00,281 Sal: I guess the cross is because once you're in the hospital 27 00:01:00,281 --> 00:01:02,167 you might get a little religious. 28 00:01:02,167 --> 00:01:04,159 Dr. Baker: Exactly! I mean not sure 29 00:01:04,159 --> 00:01:06,202 if that's why they had in mind originally but... 30 00:01:06,202 --> 00:01:07,967 Sal: But what about the BLUE? 31 00:01:07,967 --> 00:01:09,360 Dr. Baker: I don't know where the BLUE comes from. 32 00:01:09,360 --> 00:01:10,544 Sal: Is that just the color that makes people feel good? 33 00:01:10,544 --> 00:01:11,700 It's like a healthcare color? 34 00:01:11,700 --> 00:01:13,024 Dr. Baker: think it must be healthcare color. 35 00:01:13,024 --> 00:01:14,352 Sal: Red would be inappropriate. 36 00:01:14,352 --> 00:01:16,628 Dr. Baker: Let's go with blue. Blue is.. you're not bleeding. 37 00:01:16,628 --> 00:01:19,628 Sal: Exactly! Blue is...you look at the sky. OK! 38 00:01:19,628 --> 00:01:22,758 What happens I do see these words used together. 39 00:01:22,758 --> 00:01:25,219 So these were separate plans? 40 00:01:25,219 --> 00:01:26,821 Doctors created the BlueShield, 41 00:01:26,821 --> 00:01:29,747 Hospitals created the BlueCross. 42 00:01:29,747 --> 00:01:31,794 Dr. Baker: and then they grew over time and changed. 43 00:01:31,794 --> 00:01:33,462 So they got started in the 30s, 44 00:01:33,462 --> 00:01:37,502 they were..around through the 40s, 50s, 60s, 70s.. 45 00:01:37,502 --> 00:01:39,500 and so a couple of things happened along the way 46 00:01:39,500 --> 00:01:42,332 that starts to make things confusing a little bit. 47 00:01:42,332 --> 00:01:45,233 One is that they're operating in every state, 48 00:01:45,233 --> 00:01:47,162 to some extent independently. 49 00:01:47,162 --> 00:01:50,205 So states regulate health insurance in this country or.. 50 00:01:50,205 --> 00:01:52,673 have a lot to do with regulating health insurance in this country. 51 00:01:52,673 --> 00:01:55,327 And so every state had its own laws and as a result.. 52 00:01:55,327 --> 00:01:58,567 the BlueCross and the BlueShield plans in different states 53 00:01:58,567 --> 00:02:00,165 grew up in different ways. 54 00:02:00,165 --> 00:02:02,827 So what you come down to today is really different plans.. 55 00:02:02,827 --> 00:02:05,779 in every state because of this history of development. 56 00:02:05,779 --> 00:02:07,433 As states developed their laws differently, 57 00:02:07,433 --> 00:02:09,367 the plans would evolve in the different states separately. 58 00:02:09,367 --> 00:02:12,123 Sal: I see, just to give myself a kind of framework of 59 00:02:12,123 --> 00:02:15,606 what was happening is in the pre 1920s, early 1930s: 60 00:02:15,606 --> 00:02:17,633 there were not really weren't healthcare plans, 61 00:02:17,633 --> 00:02:20,575 the physicians say, hey we want people to have a way 62 00:02:20,575 --> 00:02:23,617 for people to see us without having to, you know, 63 00:02:23,617 --> 00:02:25,870 someway for them to be paying a little bit every month 64 00:02:25,870 --> 00:02:27,100 or every year and that is, 65 00:02:27,100 --> 00:02:29,100 if something would happen, they can see the doctors. 66 00:02:29,100 --> 00:02:31,374 The hospitals kind of have the same model but 67 00:02:31,374 --> 00:02:33,296 they did it differently in every state, 68 00:02:33,296 --> 00:02:35,588 because the state is the regulatory. 69 00:02:35,588 --> 00:02:37,015 Dr. Baker: The state, especially in the 1930s, 70 00:02:37,015 --> 00:02:38,110 there weren't a lot of state regulations 71 00:02:38,110 --> 00:02:39,204 about the health insurance. 72 00:02:39,204 --> 00:02:41,148 There wasn't health insurance. But as states evolved, 73 00:02:41,148 --> 00:02:43,422 as their healthcare system evolved, as their plans evolved, 74 00:02:43,422 --> 00:02:45,363 it grew separately 75 00:02:45,363 --> 00:02:47,304 in slightly different directions in every state. 76 00:02:47,304 --> 00:02:49,837 So that led to the formation- really of you see.. 77 00:02:49,837 --> 00:02:51,938 BlueCross of Tennessee or BlueShield of Florida, 78 00:02:51,938 --> 00:02:54,437 BlueCross/BlueShield of Michigan. 79 00:02:54,437 --> 00:02:55,498 They are all different 80 00:02:55,498 --> 00:02:57,379 because they are all in their own state environment. 81 00:02:57,379 --> 00:03:01,071 Sal: So this is normally these kinds of brands, 82 00:03:01,071 --> 00:03:03,068 we all have heard of them in that way. 83 00:03:03,068 --> 00:03:06,111 But normally a brand means something. 84 00:03:06,111 --> 00:03:07,805 It means more quality or less quality. 85 00:03:07,805 --> 00:03:10,289 But in...or some type of spin on....you know 86 00:03:10,289 --> 00:03:12,763 Apple means fun consumer experience 87 00:03:12,763 --> 00:03:13,975 or something like that. 88 00:03:13,975 --> 00:03:17,260 But in this case - if I'm hearing you correctly 89 00:03:17,260 --> 00:03:20,088 If there's BlueCross of California and BlueCross of Texas: 90 00:03:20,088 --> 00:03:22,567 they have nothing to do with each other 91 00:03:22,567 --> 00:03:24,233 or very little to do with each other? 92 00:03:24,233 --> 00:03:27,614 Dr. Baker: So they all had their start kind of together in the 30s, 93 00:03:27,614 --> 00:03:29,633 and then they've all grown in their own ways. 94 00:03:29,633 --> 00:03:32,238 But they've stayed related and 95 00:03:32,238 --> 00:03:34,299 some of them to greater extents than others. 96 00:03:34,299 --> 00:03:36,396 So one of the things that happened, along the way, 97 00:03:36,396 --> 00:03:38,155 was that they formed an association. 98 00:03:38,155 --> 00:03:39,477 There's now something in the US called 99 00:03:39,477 --> 00:03:41,938 the BlueCross/BlueShield Association. 100 00:03:41,938 --> 00:03:44,539 Which is - I guess - 101 00:03:44,539 --> 00:03:47,557 an association of a lot of the plans in different states 102 00:03:47,557 --> 00:03:49,282 that allows them to talk to each other, 103 00:03:49,282 --> 00:03:50,546 to try to work together. 104 00:03:50,546 --> 00:03:52,179 Sal: This is an umbrella 105 00:03:52,179 --> 00:03:54,627 for all of the BlueCross and all of the BlueShield. 106 00:03:54,627 --> 00:03:56,845 So that's why we hear them used so frequently together, 107 00:03:56,845 --> 00:03:58,146 people say: BlueCross/BlueShield. 108 00:03:58,146 --> 00:03:59,375 Dr. Baker: Yeah, so there are 2 reasons 109 00:03:59,375 --> 00:04:00,573 that you hear that together. 110 00:04:00,573 --> 00:04:02,299 One is the Association that tries 111 00:04:02,299 --> 00:04:04,025 to work with plans from both groups. 112 00:04:04,025 --> 00:04:06,180 The other is that in some states, over time, 113 00:04:06,180 --> 00:04:07,612 the 2 got together 114 00:04:07,612 --> 00:04:09,291 and actually became 1 health insurance plan. 115 00:04:09,291 --> 00:04:11,404 So there are states where the health insurance plan 116 00:04:11,404 --> 00:04:14,609 is BlueCross and BlueShield of a state. 117 00:04:14,609 --> 00:04:16,745 And there are other states where they stayed separate. 118 00:04:16,745 --> 00:04:18,256 So, we're here in California 119 00:04:18,256 --> 00:04:19,767 where BlueShield and BlueCross 120 00:04:19,767 --> 00:04:22,085 have historically stayed as separate plans. 121 00:04:22,085 --> 00:04:23,688 But there are some states where they're the same thing 122 00:04:23,688 --> 00:04:25,708 and then you hear BlueCross and BlueShield. 123 00:04:25,708 --> 00:04:29,284 Sal: So if someone tells you BlueCross of State X, 124 00:04:29,284 --> 00:04:31,606 that just means to you Health Insurance Plan. 125 00:04:31,606 --> 00:04:35,216 There is nothing else that you can really take from that. 126 00:04:35,216 --> 00:04:36,482 Dr. Baker: So once upon a time, 127 00:04:36,482 --> 00:04:38,432 you may have been able to take more from it. 128 00:04:38,432 --> 00:04:39,700 But these days... 129 00:04:39,700 --> 00:04:42,008 it's possible for them to vary in quite a few different ways. 130 00:04:42,008 --> 00:04:44,470 Some of the BlueCross and BlueShield plans - 131 00:04:44,470 --> 00:04:46,490 especially the BlueCross plans 132 00:04:46,490 --> 00:04:48,510 have become 'for-profit' plans. 133 00:04:48,510 --> 00:04:51,201 So historically these were always non-profit, but in the last.. 134 00:04:51,201 --> 00:04:52,332 Sal: So, BlueCross especially: 135 00:04:52,332 --> 00:04:53,463 some of them have gone for-profit? 136 00:04:53,463 --> 00:04:56,219 Dr. Baker: Yes, but I think in both cases. 137 00:04:56,219 --> 00:04:59,338 But BlueCross is the one that I pay more attention to. 138 00:04:59,338 --> 00:05:01,062 Sal: Right. 139 00:05:01,062 --> 00:05:05,089 Dr. Baker: So they may be for-profit or not-for-profit plans. 140 00:05:05,089 --> 00:05:07,736 They may act in similar ways, 141 00:05:07,736 --> 00:05:09,268 and they do because the Association 142 00:05:09,268 --> 00:05:10,801 - at least the ones in the Association - 143 00:05:10,801 --> 00:05:13,879 tend to act with some similarity from place to place. 144 00:05:13,879 --> 00:05:15,747 Sal: and just to - because I've explained this all the time - 145 00:05:15,747 --> 00:05:17,395 about even Khan Academy is a not-for-profit. 146 00:05:17,395 --> 00:05:20,228 A not-for-profit is an entity, it can in theory charge revenue. 147 00:05:20,228 --> 00:05:22,550 Khan Academy doesn't. But it could charge revenue 148 00:05:22,550 --> 00:05:24,547 but there is no owner of the organization 149 00:05:24,547 --> 00:05:26,149 who can, kind of, become rich off of it. 150 00:05:26,149 --> 00:05:27,984 It is owned by the public. 151 00:05:27,984 --> 00:05:29,818 While for-profit has shareholders 152 00:05:29,818 --> 00:05:32,399 and it can be bought and sold 153 00:05:32,399 --> 00:05:34,859 and issue dividends and all the rest. 154 00:05:34,859 --> 00:05:36,227 Dr. Baker: Yes, so historically in America, 155 00:05:36,227 --> 00:05:38,567 most healthcare plans were not-for-profit entities. 156 00:05:38,567 --> 00:05:43,146 They couldn't take money that they earned and 157 00:05:43,146 --> 00:05:45,515 give it out to people who might be the owners 158 00:05:45,515 --> 00:05:46,954 - it had to be reinvested. 159 00:05:46,954 --> 00:05:49,126 In fact even in the early days of BlueCross and BlueShield 160 00:05:49,126 --> 00:05:52,211 in some states they were treated as quasi public entities, 161 00:05:52,211 --> 00:05:55,081 and they've kind of grown away from that a bit more. 162 00:05:55,081 --> 00:05:56,824 But there's this history, 163 00:05:56,824 --> 00:05:58,567 especially with BlueCross and BlueShield, 164 00:05:58,567 --> 00:06:00,468 a very not-for-profit public spirited entities. 165 00:06:00,468 --> 00:06:02,651 When you get to for-profit plans, 166 00:06:02,651 --> 00:06:05,623 which we really didn't have in the US in a big way 167 00:06:05,623 --> 00:06:07,899 until maybe the last decade or two. 168 00:06:07,899 --> 00:06:10,314 Where we've seen some conversions, 169 00:06:10,314 --> 00:06:12,729 these are situations where the plan can act explicitly 170 00:06:12,729 --> 00:06:15,143 as a profit generator for its shareholders, for its owners. 171 00:06:15,143 --> 00:06:18,263 Sal: Right and some are now publicly traded 172 00:06:18,263 --> 00:06:20,136 and they're on the stock exchange. 173 00:06:20,136 --> 00:06:21,924 And so when we talk about some of them 174 00:06:21,924 --> 00:06:23,712 becoming for-profit here, 175 00:06:23,712 --> 00:06:27,410 it's that, literally, the license to use the name 176 00:06:27,410 --> 00:06:29,446 either BlueCross or BlueShield, 177 00:06:29,446 --> 00:06:31,628 or maybe some of the assets of the former not-for-profit 178 00:06:31,628 --> 00:06:33,441 are somehow transferred.. or, 179 00:06:33,441 --> 00:06:34,904 I guess, the for-profit buys them. 180 00:06:34,904 --> 00:06:37,179 Dr. Baker: So we had a series of these things. 181 00:06:37,179 --> 00:06:39,065 We call them conversions: 182 00:06:39,065 --> 00:06:40,780 when the company converted 183 00:06:40,780 --> 00:06:42,495 from being a not-for-profit to a for-profit. 184 00:06:42,495 --> 00:06:44,215 There were a lot of states in which 185 00:06:44,215 --> 00:06:46,955 those conversions, or situations in which they happen, 186 00:06:46,955 --> 00:06:52,156 where the public - the government - 187 00:06:52,156 --> 00:06:56,748 somebody compelled the for-profit entity 188 00:06:56,748 --> 00:06:59,401 in the conversion to create a public good. 189 00:06:59,401 --> 00:07:01,328 So there are some foundations that now exist but.. 190 00:07:01,328 --> 00:07:02,567 Sal: Oh, I see. 191 00:07:02,567 --> 00:07:03,418 Dr. Baker: In the conversion, 192 00:07:03,418 --> 00:07:06,158 they allowed a transfer of not-for-profit to for-profit 193 00:07:06,158 --> 00:07:08,545 but you had to create something valuable for the public. 194 00:07:08,545 --> 00:07:10,546 So some of the things that we see now in states: 195 00:07:10,546 --> 00:07:12,915 some of the big foundations that exist in healthcare 196 00:07:12,915 --> 00:07:14,494 are conversion foundations 197 00:07:14,494 --> 00:07:16,073 around the for-profit conversions of.. 198 00:07:16,073 --> 00:07:20,936 Sal: I see. But, when we see things like, 199 00:07:20,936 --> 00:07:23,528 I always get confused between BlueCross and BlueShield, 200 00:07:23,528 --> 00:07:26,800 but I believe that Anthem has a Blue... 201 00:07:26,800 --> 00:07:28,797 Dr. Baker: BlueCross in California. 202 00:07:28,797 --> 00:07:33,906 So Anthem is a company that is - well 203 00:07:33,906 --> 00:07:36,228 it is a large company that has BlueCross, 204 00:07:36,228 --> 00:07:39,564 I think mostly BlueCross or all BlueCross, 205 00:07:39,564 --> 00:07:42,125 affiliates or sub-entities in different states. 206 00:07:42,125 --> 00:07:43,797 I think that they have 14 or 15. 207 00:07:43,797 --> 00:07:46,862 Sal: Right, so these are for-profit BlueCrosses, 208 00:07:46,862 --> 00:07:48,428 if they have Anthem with them? 209 00:07:48,428 --> 00:07:49,710 Dr. Baker: I believe that's correct. 210 00:07:49,710 --> 00:07:50,628 Sal: Right, right. 211 00:07:50,628 --> 00:07:52,544 And, is there any, I guess how they operate, 212 00:07:52,544 --> 00:07:55,030 from a consumer point of view, any difference 213 00:07:55,030 --> 00:07:57,543 between a for-profit BlueCross or BlueShield? 214 00:07:57,543 --> 00:07:59,412 Anything that we can tell? 215 00:07:59,412 --> 00:08:00,613 Dr. Baker: So that's a really interesting question. 216 00:08:00,613 --> 00:08:02,280 There are people who've gone to look and 217 00:08:02,280 --> 00:08:04,045 they've tried to, sometimes, 218 00:08:04,045 --> 00:08:05,810 find some evidence for differences. 219 00:08:05,810 --> 00:08:07,273 There are a few studies out there where 220 00:08:07,273 --> 00:08:08,805 people can find some differences but 221 00:08:08,805 --> 00:08:10,284 there is not a lot of evidence 222 00:08:10,284 --> 00:08:11,763 that they behave really differently. 223 00:08:11,763 --> 00:08:13,256 At the end of the day, 224 00:08:13,256 --> 00:08:14,749 they have to compete in the same market place 225 00:08:14,749 --> 00:08:17,071 for the business of the same companies, the same people. 226 00:08:17,071 --> 00:08:19,881 And if they behave really obviously different: 227 00:08:19,881 --> 00:08:21,700 if one was obviously way better than the other, 228 00:08:21,700 --> 00:08:23,898 the market would sort out who is going to win this. 229 00:08:23,898 --> 00:08:26,146 And the market has allowed both types to exist. 230 00:08:26,146 --> 00:08:28,273 So, there are certainly differences 231 00:08:28,273 --> 00:08:30,400 in the written charters and 232 00:08:30,400 --> 00:08:34,161 maybe differences in the preferences in the stated ideals 233 00:08:34,161 --> 00:08:35,880 of the people who run these organizations 234 00:08:35,880 --> 00:08:37,737 and that might make a difference in some cases. 235 00:08:37,737 --> 00:08:40,036 But it is hard when you aggregate it all together and 236 00:08:40,036 --> 00:08:42,404 you really go try to do national data or something 237 00:08:42,404 --> 00:08:44,152 to find a big difference. 238 00:08:44,152 --> 00:08:46,033 Sal: So the big picture here is, 239 00:08:46,033 --> 00:08:48,627 as much as I've looked at healthcare plans even when 240 00:08:48,627 --> 00:08:50,996 we're trying to figure out for employees at Khan Academy, 241 00:08:50,996 --> 00:08:52,435 which healthcare plan to choose and which not. 242 00:08:52,435 --> 00:08:53,271 And I've thought: Oh, 243 00:08:53,271 --> 00:08:55,222 what's the difference between BlueCross and BlueShied? 244 00:08:55,222 --> 00:08:56,615 There's actually very little that I can tell 245 00:08:56,615 --> 00:08:58,033 just by looking at those brands. 246 00:08:58,033 --> 00:08:59,364 I really have to dig deeper 247 00:08:59,364 --> 00:09:00,695 into the actually healthcare policy. 248 00:09:00,695 --> 00:09:03,024 That's going to be different from state to state. 249 00:09:03,024 --> 00:09:05,167 Some will be for-profit, some will be not-for-profit, 250 00:09:05,167 --> 00:09:06,901 and even that's not enough to tell you. 251 00:09:06,901 --> 00:09:07,691 General rule of thumb: 252 00:09:07,691 --> 00:09:09,595 you really have to look at the healthcare plans. 253 00:09:09,595 --> 00:09:11,545 Dr. Baker: You have to look at the healthcare plans 254 00:09:11,545 --> 00:09:12,892 and it's BlueCross and BlueShield, but 255 00:09:12,892 --> 00:09:14,216 there's other plans out there. 256 00:09:14,216 --> 00:09:15,539 There's Kaiser around here. 257 00:09:15,539 --> 00:09:17,818 There's Aetna and Cigna and other plans. 258 00:09:17,818 --> 00:09:20,367 And they can vary from state to state and 259 00:09:20,367 --> 00:09:22,900 even within, you can see variations. 260 00:09:22,900 --> 00:09:25,640 So BlueCross in California or BlueShield in California 261 00:09:25,640 --> 00:09:27,700 might offer some different types of choices. 262 00:09:27,700 --> 00:09:31,306 So if you said that I've got a really nice plan from BlueCross 263 00:09:31,306 --> 00:09:33,303 and I look at another state and you look at a BlueCross plan 264 00:09:33,303 --> 00:09:36,300 it might be that you're just looking at a less generous one, 265 00:09:36,300 --> 00:09:38,225 where there is another you could look at. 266 00:09:38,225 --> 00:09:40,640 So you even need to look within a company at the specifics. 267 00:09:40,640 --> 00:09:42,962 Sal: Definitely when we go from state to state, 268 00:09:42,962 --> 00:09:44,936 it would be weird to have brand loyalty. 269 00:09:44,936 --> 00:09:47,367 Dr. Baker: Yeah, BlueCross and BlueShield have 270 00:09:47,367 --> 00:09:50,601 this history of being public spirited entities 271 00:09:50,601 --> 00:09:52,877 and some of that persists to this day. 272 00:09:52,877 --> 00:09:54,270 Maybe that is something to think about but 273 00:09:54,270 --> 00:09:55,454 in a general sense, 274 00:09:55,454 --> 00:09:56,639 there are so many things that they can vary on 275 00:09:56,639 --> 00:09:58,288 that you'd want to be very careful 276 00:09:58,288 --> 00:09:59,936 with any choice you're making 277 00:09:59,936 --> 00:10:02,633 and know that it can really vary across state lines. 278 00:10:02,633 --> 00:10:04,708 Sal: Interesting.