Blue Shield's tax exemption loss could trigger cascade

It came as a bit of a shock when Blue Shield of California--not only one of the state's largest insurers but one of its largest not-for-profit organizations--lost its state tax exemption. But it begs the question--which healthcare entities may be next on the chopping block?

State regulators in California cut off Blue Shield's tax exemption last year, although it was disclosed just in recent weeks. A former Blue Shield executive said that the health plan would have to surrender a significant proportion of its assets in order to redeem itself and hope to recapture its tax-exempt status anytime soon.

But it should serve as a warning to other healthcare organizations. California HealthLine, surveyed the healthcare landscape and made some conclusions about which not-for-profits might be in line to receive a tax exempt haircut of their own.

The reason this comes up is because Blue Shield appears not to be some regulatory one-off, but one in a wave of potential moves by lawmakers and regulators to curb some of the monetary power of large organizations that currently enjoy tax exemptions. Lawmakers in California state have introduced legislation that would have not-for-profit hospitals more closely hew to coherent charity care policies, according to California HealthLine. But the California Hospital Association is fighting such attempts tooth and nail.

Meanwhile, lawmakers in Connecticut work on a bill that would strip the property tax exemption for many hospitals in the state--those with an emergency room or federally qualified health center on premises would be allowed to keep the exemption, the Register-Citizen reported.

In New Jersey, Morristown Medical Center has been engaged in a years-long battle to keep its tax exemption in place, NJSpotlight reported.

And nationally, the Blues Association is coming under pressure in the form of lawsuits challenging its power, according to Forbes.

To learn more:
- read the California HealthLine article
- here's the Register-Citizen article 
- check out the NJSpotlight article 
- read the Forbes article