This paper analyzes the reasons for the rise and decline of Blue Cross, a unique American institution. Its inability to respond to the crisis in today's health system is described as nothing more than the failure of the ailing American health system to cure itself.

The early rise of Blue Cross is attributed to its success in addressing pressing social needs: helping patients afford the costs of hospitalization and helping hospitals meet expenses. Its later decline is traced to several factors: the striking increase in the costs of health care; the rise of the state insurance commissioner; the anticipated passage of national health insurance; and the increased competition from commercial insurance carriers, specialty health care data and management firms and state governments.

In concluding, the question is raised whether society should invest further in the future of Blue Cross, a social institution which may have irrevocably lost the confidence of the general public, government and the health provider community. Four possible futures for Blue Cross are set forth: the outright collapse of several plans, a “Lockheed-type” bailout, a “Naderist” organization strongly allied with consumers, and a quasi-governmental agency.

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