Billions in the bank

It’s recently come to light that Blue Shield of California, the state’s third largest insurer, has been stripped of its tax-exempt status.

The California Franchise Tax Board revoked the nonprofit’s exemption in August, but that wasn’t public information prior to a March 17 report from The Los Angeles Times. Michael Johnson, who recently resigned as chief executive of Blue Shield of California—a position that paid $4.6 million—recently questioned whether the company has done enough public good, according to NPR.org. The insurer maintains rates similar to its for-profit competitors, reportedly has $4.2 billion in financial reserves—four times what’s required by the national trade organization Blue Cross and Blue Shield Association for paying member claims—and makes an annual charitable donation of $35 million.

“We’re talking about a $10 billion public asset,” Johnson said, “and the only real return the public is getting is $35 million in charitable contributions each year? That’s just a lousy deal.”

Blue Shield is protesting the decision by the tax board, which ordered the company to file returns dating back to 2013.