Tax exemptions of profit-making health care businesses, long controversial in an industry that is taking hold of a greater share of the U.S. economy, are coming under fire once again.

This time, its nonprofit health insurance companies like Blue Shield of California, which recently lost its state income tax exemption after a government audit. Though Blue Shield of California is protesting the decision of the California Franchise Tax Board, the Los Angeles Times Chad Terhune, who is doggedly following the story, reported that the insurer paid $63 million in back taxes to the state for 2013 and 2014.

At issue in these tax disputes generally centers on the business behavior of a health care company that has had an exemption for decades, but challenges emerge as critics see actions differing little from health businesses that do pay taxes. Tax-exempt hospitals, too, have lost income or property tax exemptions when their missions to treat the poor and uninsured dont mesh with actions that have included overzealous bill collecting, high prices and lack of care to the indigent.

Blue Shield of California, which has more than three million customers, has come under fire for premium increases that are higher than a lot of for-profit insurers. Its billions of dollars in reserves have also been criticized.

There are several large nonprofit health plans that have independent licenses from the Blue Cross and Blue Shield Association, including Blue Shield of California and Blues plans in many states.

Investor Investor-owned companies that pay taxes like Anthem Anthem (ANTM), formerly known as Wellpoint, also operate health plans under the Anthem Blue Cross and Blue Cross and Blue Shield brands. Other tax-paying Blue Cross plans, such as those under the Health Care Service Corp. umbrella, are mutual and therefore owned by policyholders.

But doctors, hospitals, public watchdogs and plaintiffs attorneys targeting Blues plans on other issues like market power are also shining light on tax exemptions.

In Alabama, for example, a lawsuit filed three years ago by a chiropractor survived an effort by Blue Cross plans to get it dismissed last year and was recently consolidated into a large federal class action. It alleges antitrust violations against Blues plans, accusing them, among other things, of conspiring to fix what they pay doctors and other medical-care providers across the country. The allegations, vigorously denied by Blues plans, are lodged against nonprofit, mutual and investor owned Blues plans. There is an important relationship between what is happening in California and what is happening in our case, Joe Whatley, an attorney for plaintiffs suing Blues plans in the Alabama federal court said in a story posted on the web site tracking the litigation against the Blue Cross and Blue Shield insurers. While they claim to be non-profit, they charge their insured more than they should and they pay their providers less than they should. They build up these huge reserves, more than are needed under any circumstances.

Blues plans deny the allegations. Blues plans also argue that they are facing unprecedented competition across the country from the likes of Aetna Aetna (AET), Cigna Cigna (CI), Humana (HUM) and UnitedHealth Group (UNH), which are all growing and offering more choices thanks in part to the Affordable Care Act and its subsidies to millions of formerly uninsured Americans.

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Wagons Circle On Nonprofit Blues Health Plan Tax Exemptions