California revokes health insurer Blue Shield's tax-exempt status
Source: Los Angeles Times
Authorities have revoked the tax-exempt status of nonprofit Blue Shield of California, potentially putting it on the hook for tens of millions of dollars in state taxes each year. The move by the California Franchise Tax Board comes as the state's third-largest health insurer faces fresh criticism over its rate hikes, executive pay and $4.2 billion in financial reserves.
... A spokeswoman for the tax agency declined to comment on the reasons for revocation. The highly unusual action comes after a lengthy state audit that looked at the justification for Blue Shield's taxpayer subsidy. The insurer has paid federal taxes for years.
... Now, a company insider has sided with critics. Michael Johnson, who resigned as public policy director last week after 12 years at the company, said the insurer has been "shortchanging the public" for years by shirking its responsibility to Californians and operating too much like its for-profit competitors.
On Wednesday, Johnson plans to launch a public campaign calling on executives to convert the insurer into a for-profit company and return billions of dollars to the public that could be used to bolster the state's healthcare safety net. He estimates the company could be worth as much as $10 billion.
Read more: http://www.latimes.com/business/la-fi-blue-shield-california-20150318-story.html#page=1
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