What Even Is Blue Cross & Blue Shield, Anyway?

Few people fully understand how Blue Cross Blue Shield (BCBS) operates. Essentially, it works like a franchise, similar to brands like Dunkin’ Donuts. Independent companies serve specific regions while following the standards and guidelines set by the Blue Cross Blue Shield Association. This structure allows for a localized focus while maintaining consistency nationwide.

In theory, if someone had the resources and identified an unserved area in the U.S., they could petition the Association to establish a new Blue Cross or Blue Shield company there. This franchise-like model enables expansion while preserving localized service.

Here in Pennsylvania, for example, there are several Blue companies:

• Independence Blue Cross
• Capital Blue Cross
• Highmark Blue Cross Blue Shield (plus Highmark Blue Shield in certain areas)

The Rules of Blue Cross and Blue Shield

The rules are simple:

• If there’s already a Blue Cross in an area, another Blue Cross can’t operate there.
• The same applies to Blue Shield: no duplicate Blue Shield companies in the same region.

For instance, Horizon Blue Cross Blue Shield of New Jersey exclusively covers New Jersey, meaning no other company can enter that market under the Blue Cross or Blue Shield name. However, they can establish sister companies. For example, AmeriHealth, the sister company of Independence Blue Cross, operates in New Jersey without using the BCBS name because Horizon owns the Blue franchise rights in that area.

In Southeastern Pennsylvania, Independence Blue Cross has long held the Blue Cross license, making it the only Blue Cross provider in the region (Philadelphia, Bucks, Montgomery, Chester, and Delaware coutnies). A Blue Shield company could have operated there, but Independence and Highmark had a longstanding agreement—until recently. That’s why Highmark Blue Shield is allowed in Southeastern PA today.

A Shake-Up: Interstate Competition

A recent lawsuit involving Blue Cross Blue Shield of Alabama has changed the game. It opened the door for interstate competition, enabling certain Blue companies to expand into new markets—a move previously prohibited.

The For-Profit Exception: Anthem

Most BCBS companies are not for profit, but Anthem Blue Cross (rebranded as Elevance) is one of the few publicly traded companies among the “Blues.” As part of the “Big 5” insurers (UnitedHealthcare, CVS/Aetna, Humana, and Cigna), Anthem must answer to Wall Street shareholders, which sets it apart from its not for profit peers.

The Local Advantage

The “Blues” are highly localized. They work closely with local doctors and design plans tailored to the unique needs of their communities. This local focus is why BCBS coverage often feels more personalized compared to the cookie-cutter plans from national for-profit insurers.

For example, Independence Blue Cross only covers five counties in Southeastern Pennsylvania. This means your premium isn’t impacted by events in other states. By contrast, national insurers like Aetna or Humana may raise rates across the board if they have a bad year in another region, such as Idaho.

To recap the rule:

• You can’t have two Blue Cross companies in one area.
• You can’t have two Blue Shield companies in one area.
• But you can have one of each, depending on agreements.

HMO vs. PPO vs. EPO: What’s the Difference?

Let’s talk about how BCBS structure impacts your coverage.

• HMO (Health Maintenance Organization):
  If you have an HMO plan with Independence Blue Cross, your coverage is tied to the region. If you leave the area, you’re out of network unless it’s an emergency.
• PPO (Preferred Provider Organization):
  With a PPO, you can tap into the national Blue Cross Blue Shield network. Many unions and large employers use this option—they self-insure and then lease access to a national network from BCBS, Cigna, Aetna, or whoever offers the best terms. PPOs provide national flexibility, but they’re more expensive.
• EPO (Exclusive Provider Organization):
  An EPO offers no out-of-network benefits, but some BCBS EPOs may still allow access to the national BlueCard network—unless restricted.

For example, Horizon Blue Cross Blue Shield of New Jersey doesn’t offer any individual plans that allow coverage outside New Jersey (except for emergencies). Even group plans often charge extra for BlueCard access.

The Takeaway

Blue Cross Blue Shield isn’t a single company—it’s a not for profit association that licenses its brand to regional carriers. While most carriers are not for profit, some, like Elevance (formerly Anthem), are for-profit. Together, they form a system that appears unified, but operates differently depending on your location.

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