For one case study in MBA school, the teacher had us analyze when it was better for a hospital to classify itself as nonprofit or for-profit.
The teacher took us through hypothetical cash flows for different procedures, then we calculated the bottom line. We learned that if hospitals could not earn enough profit margin on medical procedures, it was better to adjust some prices down or accept a certain threshold of pro bono work. If we could ensure our imaginary hospital didn’t make a “profit,” then we wouldn’t have to pay taxes, so it became more profitable to be a nonprofit.
Of course, sometimes medical institutions don’t lose their nonprofit status because of tax shenanigans; they lose it because they are evil.
That’s been the case with Blue Shield of California (Cal Blue), a prime example of a for-profit organization that has tried to masquerade as a nonprofit.
Like a for-profit health insurer, Cal Blue stockpiles vast cash reserves while continually hiking premiums, rather than using those reserves to lower them. By 2014, the hoard was worth $4.2 billion, not quite as much as the dragon Smaug’s in “The Hobbit,” but probably more evil since Smaug didn’t get his wealth by letting sick kids die.
Meanwhile, Blue Shield’s chief executive, Paul Markovich, made $3.5 million that year, almost $10,000 daily, and 40 percent more than the $2.5 million he earned in 2013. (Think of that while you’re looking at how your premiums have been “adjusted” after open enrollment.)
The situation became so bad that California stepped in and revoked Cal Blue’s bogus tax-exempt status in 2015. Yes, this group is so bad that even California had to acknowledge it had crossed the line.
That was a long time ago, and Cal Blue has had 10 years to come up with new evil plans. (They could just straighten up and fly right, but … come on.) Now, Cal Blue is part of an interconnected web of nonprofit and for-profit businesses, actively participating in political pay-offs to avoid that kind of accountability.
Last May, Blue Shield restructured under a newly formed parent company named Ascendiun, a nonprofit corporation registered in Delaware. It appears to be a shell company, with zero to one employee, namely Paul Markovich. Cal Blue also launched Stellarus, another Delaware LLC, specifically to compete with pharmacy benefit managers. A third company, Altais — a clinical services firm, whatever that means — all now sit under Ascendiun’s umbrella.
This kind of restructuring makes it easier to get away with, shall we say, creative accounting. To help make sure auditors don’t get too nosy, Blue Shield has also made some strategic political donations — that’s a fancy word for bribes. In 2025, Blue Shield of California gave $780,330. Cal Blue also donated $50,000 to the California Democratic Party (with zero dollars going to California’s Republican Party). The group donated $500,000 to Gov. Gavin Newsom’s Ballot Measure Committee to back Proposition 50, a gerrymandering plan that will likely give Democrats five additional seats in Congress.
When pressed about the donation, a representative denied direct support of the ballot initiative, arguing it was the only measure on the ballot. By D.C. flak standards, that kind of hair-splitting ranks up there with, “It depends on what the meaning of the word ‘is’ is.”
If 2025 was a year of redistricting, 2026 is shaping up to be the year of “affordability,” and it appears the Ways and Means and Energy and Commerce committees in the House might have found one company on the wrong side of both issues with Cal Blue’s parent company Ascendiun.
Both committees are set to hold a hearing to show that “Republicans are committed to making healthcare more affordable by driving solutions that increase patient choice and competition, root out waste, fraud, and abuse, and put patients back at the center of our healthcare system,” according to the committees’ chairmen.
One has to admire the lengths that Cal Blue will go to as long as it doesn’t involve just taking care of the people it is supposed to insure. The bogus nonprofit hospitals we learned about in business school at least got there by doing some charity work. Oh, but Cal Blue appointed its first! ever! female! CEO!, and it gave $20,000 to the LGBT Caucus Leadership Fund — so reporters will be blinded by Cal Blue’s wokescreen instead of following the money, afflicting the comfortable, and comforting the afflicted.
California did the right thing by holding Cal Blue’s feet to the fire 10 years ago, and the state government needs to stay the course. Do progressives believe in holding evil companies accountable, or only evil companies that don’t donate blue?