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California Tax Officials Slam Blue Shield In Audit

Andrew Nixon / Capital Public Radio
 

Andrew Nixon / Capital Public Radio

(AP) - State officials say their decision to strip Blue Shield of California of its tax-exempt status is justified by an audit that outlines the nonprofit health insurer's stockpiling of $4 billion in surpluses.

The Los Angeles Times reports Sunday that the California Franchise Tax Board report slams Blue Shield for its "extraordinarily high surpluses" and for failing to offer more affordable coverage or other public benefits.

Auditors found Blue Shield's operations are indistinguishable from those of its for-profit health care competitors. The tax board says the insurance giant does not advance social welfare, the key test for preserving its exemption.

California's third-largest health insurer's tax-exempt status was revoked last August.

Blue Shield has argued in favor of the exemption, pointing to charitable giving of about $30 million annually and its voluntary 2 percent cap on profits.