A California regulator ruled that nonprofit Blue Shield has no public benefit duty, potentially costing Californians billions of dollars. She refuses to explain her decision.
The ruling by California’s health plan regulator that Blue Shield has no charitable trust obligation frees the nonprofit insurer to disregard the public good and privatizes its billions in assets.
In a stunning decision delivered last week with no explanation, California’s Department of Managed Health Care agreed with Blue Shield of California that the nonprofit has no duty to operate for the benefit of the community.
Blue Shield’s plan for the Care 1st acquisition would subordinate the interests of Medi-Cal enrollees to privately-insured enrollees, according to legal documents filed with regulators.
The disclosures in yesterday’s front-page Los Angeles Times article on the tax audit of Blue Shield make clear the need for a full-scale investigation by health plan regulators of Blue Shield’s conduct as a nonprofit.
The Department of Managed Health Care announced yesterday that it would conduct an examination of Blue Shield’s "charitable trust" obligation, or duty to work for public benefit.
In statements to health plan regulators that it has no legal duty to operate for public benefit, Blue Shield contradicted what it had told state tax authorities during an audit of its tax exemption.
Blue Shield has structured its pending acquisition of Care 1st so that despite the recent revocation of its tax exemption it would escape state and federal taxes on its new business.
California regulators announced that they'll hold a public hearing on Blue Shield’s proposed acquisition of Care 1st Health Plan. A coalition of consumer groups and I had requested the hearing.
Since Blue Shield is a nonprofit, which means it is effectively owned by the public, regulators should hold a public hearing before approving management's use of nonprofit assets to acquire another health plan.