Back in August of 2014, Blue Shield of California lost its tax-exempt status after the Franchise Tax Board determined that it no longer qualified as a nonprofit based on its business practices. The state's audit concluded that they "...stress profitability..." and "...are inconsistent with an organization organized as a nonprofit which desires tax-exempt status."
Some articles from the Los Angeles Times that covered the story:
For its part, Blue Shield believes it is "a mission-driven organization that answers to members and not shareholders..." and continues to maintain that its mission is "For Care, Not Profit":
A reliable source at Blue Shield told us they do not believe their executives have any incentive to maximize profitability stating, "Since Blue Shield has a 2% net income cap, its rates reflect the cost of health care and not higher profits. But despite its not-for-profit mission, Blue Shield faces the same market realities and rising costs as its competitors."
Blue Shield states on their website, some of the many ways it distinguishes itself from its competition:
We strive to uphold high standards of ethical business practices in our programs, products, and interactions with everyone we serve. In fact, we have been recognized as one of the World’s Most Ethical Companies in 2012 and 2013 by Ethisphere Institute.
We practice social responsibility as a company, protect the environment and volunteer in local communities.
The Blue Shield of California Foundation is funded entirely by Blue Shield of California contributions, and has awarded more than $200M in grants since 2005 to community organizations to make healthcare effective, safe and accessible, particularly for underserved communities. The Foundation is also dedicated to ending domestic violence through a coordinated network of service, support, and education.
An article published by Southern California Public Radio, a member-supported public media network, discussed what this will mean for the carrier and the consumers:
What do you think it means? Was it a fair decision? Comment below and share your thoughts!