California 'blues': Insurer stripped of tax exemption

The Golden State soon could be getting a good deal of gold from this big insurer.

California has stripped its third-biggest health insurer, Blue Shield of California, of its state tax-exempt status and ordered the non-profit to file tax returns retroactively to 2013, it was revealed Wednesday.

The move, which Blue Shield is protesting, could leave the insurer owing tens of millions of dollars annually to the state, according to the Los Angeles Times.

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The Times also noted that the move by the California Franchise Tax Board was "highly unusual," and came as Blue Shield has been criticized "over its rate hikes, executive pay and $4.2 billion in financial reserves."

Blue Shield of California
Source: Blue Shield of California

But the newspaper wrote that the tax board—which actually took the action in August—would not explain its decision, which came after an audit of Blue Shield's status.

The insurer, which had $13.6 billion in revenue in 2014, already pays federal taxes.

Blue Shield's director of public policy resigned last week after saying the company had been "shortchanging the public" for years by operating like for-profit insurers in the state.

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The Times reported that the former director, Michael Johnson, on Wednesday plans to launch a 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 health-care safety net."

Read the full LA Times story here.