The Actuarial Aspects of Blue Cross Plans

As most readers are aware, the growth of Blue Cross plans in the last fifteen years has been phenomenal. Not only have such plans grown in terms of numbers of persons covered but also in terms of complexity of operation. The actuarial problems of Blue Cross plans have also increased. There is a large variety of coverages available and premiums must be computed so that they are both adequate and competitive. The purpose of this paper is to outline the actuarial aspects of a typical Blue Cross plan. Contrary to the belief of some, there is no national Blue Cross organization for underwriting this form of protection. There are 86 separate Blue Cross organizations in the United States, one in Puerto Rico and five in Canada. Each of these organizations has a fixed, defined geographical area of operation and each operates autonomously.