Details released on why Blue Shield of California lost its tax-exempt status

The California Franchise Tax Board revoked Blue Shield of California's state tax-exempt status last year, and the tax board's audit report provides insight into its decision, according to a SFGate report.

Although the CFTB revoked the insurer's state tax-exempt status in 2014, news of the state's move didn't surface until March of this year.

The revocation came after Blue Shield of California was subjected to a state audit that examined the insurer's taxpayer subsidy and the justification for it.

The CFTB auditors found that Blue Shield of California's operations were indistinguishable from those of a for-profit health insurer, according to the report.

The auditors also highlighted the insurer's extremely high surpluses and its failure to offer more affordable coverage or other public benefits, according to the report.

"Blue Shield is not operating exclusively for the promotion of civic betterment or social welfare," tax board officials wrote to the insurer in a report.

Blue Shield of California continues to appeal the state's revocation.

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