Opponents to the bill by Sen. Jim Elliott, D-Trout Creek, favored keeping Blue Cross exempt from the taxes, saying the nonprofit company should not be punished for being successful and warning the extra cost would only be passed on to consumers.
''We know who's going to end up paying that tax,'' said Sen. Kelly Gebhardt, R-Roundup. ''(Blue Cross) will have a cost of doing business then, and they will raise their rates.''
Elliott accused Blue Cross of monopolizing the insurance industry in Montana and building up a large pool of reserves while raising premium rates. Blue Cross, he said, has used some of those reserves to buy for-profit insurance agencies and other businesses.
''There is no competition for Blue Cross,'' Elliott said. ''They determine the marketplace. They determine the provider rates. They determine the premiums in the state of Montana. We need to talk about this, and we need to talk about this publicly.''
Elliott's bill would have required Blue Cross and the state's other nonprofit health insurer, New West Health Services, to pay the 2.75 percent premium tax if their market share surpassed 33 percent.
Blue Cross currently controls 48 percent of the insurance market in Montana, while New West has a 7 percent share, Elliott said.
For-profit insurance companies operating in the state already pay the tax on the amount of premium sold, but do not pay state income taxes. Blue Cross and New West pay neither the premium nor state income taxes, but do pay property taxes in Montana.
''My contention is a company that has almost 50 percent of the market share is not behaving like a nonprofit company,'' Elliott said.
Money from the premium tax would have helped pay for public health insurance programs like the Children's Health Insurance Plan or Insure Montana, which subsidizes health insurance for small businesses and their employees.
The bill is Senate Bill 556.
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