By: Bruce Japsen
Tax exemptions of profit-making health care businesses, long controversial in an industry that is taking hold of a greater share of the U.S. economy, are coming under fire once again.
This time, it’s nonprofit health insurance companies like Blue Shield of California, which recently lost its state income tax exemption after a government audit. Though Blue Shield of California is protesting the decision of the California Franchise Tax Board, the Los Angeles Times’ Chad Terhune, who is doggedly following the story, reported that the insurer paid $63 million in back taxes to the state for 2013 and 2014.
At issue in these tax disputes generally centers on the business behavior of a health care company that has had an exemption for decades, but challenges emerge as critics see actions differing little from health businesses that do pay taxes. Tax-exempt hospitals, too, have lost income or property tax exemptions when their missions to treat the poor and uninsured don’t mesh with actions that have included overzealous bill collecting, high prices and lack of care to the indigent.