California Quietly Revoked Blue Shield’s Tax Exemption Seven Months Ago

The Los Angeles Times has just published two articles highlighting the State of California Franchise Tax Board‘s decision to revoke the state tax exemption previously enjoyed by Blue Shield of California seven months ago, but to only announce the fact by including the huge health insurer’s legal name  (California Physicians Service) in a thousand plus page document on its website listing hundreds of organizations that had also lost their exemption. Here are links to the articles:

• With Billions in the Bank, Blue Shield of California Loses Its State Tax-Exempt Status

• Why Did it Take 7 Months to Learn Blue Shield Lost Tax-Exempt Status?

The articles report that the revocation came after a lengthy audit, and that Blue Shield is protesting the decision. On the line are tens of millions in state taxes annually. The articles also summarize past criticisms of Blue Shield with respect to executive compensation, multi-billion dollar reserves, increasing premiums, and an alleged failure to serve the state’s poorest residents. Blue Shield for its part points to capping its profits at 2% of annual revenues, hundreds of millions give to its charitable foundation over the past decade, and hundreds of millions give back to customers and consumer groups in recent years. It also has reiterated its intention to remain a California mutual benefit nonprofit corporation.

Additional coverage: NPR (Health News)NPR (Morning Edition)SFGate.

Lloyd Mayer