The Origins of Blue Cross and Lessons for Today
by Christopher Dodson
Executive Director, North Dakota Catholic Conference
July 2015

The state’s newspapers recently reported that Blue Cross Blue Shield of North Dakota is celebrating it’s 75th anniversary. The story, however, did not mention the role that religious leaders and religion itself played in the organization’s formation.

Father Aloisius Muench was named Bishop of Fargo in 1935. He had received his masters degree in economics from the University of Wisconsin in Madison and later his doctorate in social studies from the University of Fribourg, Switzerland, with a dissertation entitled “Fundamental Norms for Health Insurance Legislation in the United States.” Muench - who later became the only cardinal from North Dakota - was committed to applying the Catholic Church’s social teaching to North Dakota, including the teaching that health care is a natural right for every person.

Bishop Muench encouraged Msgr. Vincent Ryan - who later became the bishop of Bismarck - and Father Anthony Peschel to develop an insurance plan to help patients pay for hospital expenses. Ryan and Peschel were, respectively, the director and the assistant director of the Catholic Welfare Bureau, the predecessor of Catholic Charities North Dakota. The proposal was first pitched to St. Luke's and St. John's hospitals in Fargo, respectively Lutheran and Catholic hospitals. The hospitals agreed and Blue Cross was formed in 1940.

Bishop Muench was issued Policy No. 1. Father (later Bishop) Leo Dworschak received policy No. 2 and Father Peschel received Policy No. 3.

It is doubtful that the reporter knew this history. Blue Cross Blue Shield’s own website account of its origins makes no mention any of the priests or the role that Catholic social teaching played in the organization’s founding.

This part of Blue Cross Blue Shield’s history is worth recalling not just for historical purposes or as a gentle reminder of the organization’s original purpose.

Many people today think that religion is always harmful to society. People of faith today are told to keep their religion to themselves and out of the public sphere, whether it be commercial, not for profit, or political affairs. If, however, these four men kept their faith to themselves or the confines of the parishes, Blue Cross Blue Shield might have never existed and most certainly thousands upon thousands of North Dakotans would not have been able to afford essential health care.

Bishop Muench strongly believed that Catholic social teaching should be applied to economic, social, and political life. Applying the church’s teaching, he favored policies and laws that strengthened family farmers and restricted corporate ownership of farmland. Again applying Catholic teaching, Bishop Muench encouraged the formation of cooperatives owned and operated by the people involved in the economic activity rather than submitting to a “free market” that allowed distant - in more ways than one - investors with no connection to the land and people affected. Pope Francis’ new encyclical makes clear that this teaching is still relevant today.

Some people, especially in the United States, are having trouble understanding the pope’s encyclical. His criticisms of capitalism, they think, make him a socialist. They are mistakenly starting with a false dichotomy. Pope Francis, like Bishop Muench decades ago, understands that according to Catholic teaching we are not faced with only two choices - government ownership or an unbridled capitalistic market. As human persons we have a multitude of choices. Bishop Muench, who understood economics and Catholic social teaching, saw that it might be possible to make health care affordable not by going to the government or leaving healthcare to the whims of the market. Similarly, he that cooperatives, combined with laws that encouraged them and discouraged corporate ownership of agricultural land, could make family ownership and operation of farms possible despite the pressure to “get big or get out” and develop “factory farms.”

Perhaps new proposals are needed for today’s world. Maybe the old models do not always work. Nevertheless, as Pope Francis’s encyclical and our own history in North Dakota reminds us, we are not mere economic or biological units relegated to false dichotomies. There are limits on what we, being fallen creatures in a finite world, can do. The economy, however, is a human creation meant to serve the human person and respect creation. It is not an either/or proposition. Let us use the creative powers our Creator has given us to help create an economic life that serves the common good, responsibly protects the environment, and puts first the needs of the poor.