The Blue Cross and Blue Shield Association said it would be willing to surrender its special tax treatment if healthcare reform were to mandate a single tax policy and a single tax rate for accountable health plans.
Mary Nell Lehnard, the Chicago-based trade group's senior vice president, told the House Ways and Means subcommittee on select revenue measures last month that there should be a one tax policy and a standard tax rate for all accountable health plans, whether for-profit or not-for-profit.
She said the Blues weren't advocating the repeal of tax exemption for not-for-profit hospitals or their access to tax-exempt financing, nor would it preclude hospitals or other provider groups from forming accountable health plans.
"What we propose is that the health plan business of any organization, including an exempt hospital or HMO, should be taxed," she said.
Richard Wade, senior vice president of communications for the American Hospital Association, said the AHA is reviewing the Blues proposal.
He said hospital-sponsored health plans probably would want to retain the not-for-profit status while an inves tor-owned health plan would not. The question is, "How can health reform contain both terms?"
The Blues are facing a simi lar conflict regarding private vs. public ownership of their 69 licensees (See related story). Paul Dennett, executive director of congressional relations, said all Blue Cross plans would face the same tax consequences regardless of corporate ownership.
The Blues system lost its federal tax exemption in 1986, but its plans can deduct a portion of their annual additions to reserves, which are then subject to the alternative minimum tax rate of 20%. Commercial insurers pay the 35% corporate rate.-Paul J. Kenkel