Blue Shield of California is a health plan provider founded in 1939 and based in San Francisco, California. The organization serves over 4 million health plan members and nearly 65,000 physicians across the state. Blue Shield of California was founded by the California Medical Association. Founded as a not-for-profit, Blue Shield of California was stripped of its tax-exempt status by the California Franchise Tax Board in 2014.
Blue Shield of California, then known as California Physicians' Service, was created by the California Medical Association on December 18, 1938, and was incorporated on February 2, 1939. The organization began offering coverage on March 6 of that same year. In 1946, the organization was among a founder of the National Association of Blue Shield Plans, which later became the Blue Cross and Blue Shield Association. Today, Blue Shield of California is an independent licensee of the national association. The Blue Shield of California health plan was the first in the nation to offer catastrophic coverage in 1950, provide coverage for a heart transplant in 1984, offer online benefit and enrollment information in 1996, and offer an online enrollment system for agents in 1998. In 2006, the National Committee for Quality Assurance, commonly referred to as NCQA, recently recognized Blue Shield as an "excellent" health plan for service and clinical quality.
In 2010, Blue Shield of California, Dignity Health, and Hill Physicians Medical Group formed an Accountable Care Organization that covers 41,000 individuals in the California Public Employees Retirement System (CalPERS). During its first 2 years, this program reduced inpatient use and health care costs significantly.
In 2014, Blue Shield of California lost its exemption from California state corporate income tax but did not officially announce this information to the public until March 2015. A claimed recent application of the Duck test was the denial of tax exempt "nonprofit" status to Blue Shield of California.
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