LOS ANGELES: Tax Break For HMOs Granted
The Los Angeles City Council voted 9-5 Friday to give HMOs a tax break, making them "pay taxes only on income from work done by doctors and clinics operating within city limits." The Los Angeles Times reports that the revised tax code, sponsored by Councilwoman Laura Chick, would exempt income from practitioners working outside of the city. HMOs would still be required to pay the same rate -- "$5.91 per $1,000 in gross receipts" -- but they "would see a collective savings of $7 million to $25 million annually" as the result of the new tax code. Additionally, the amended code requires HMOs to "pay about $8 million in back taxes and interest that they had withheld." The city council "had tentatively approved the new tax code in December," after five HMOs had threatened to move out of Los Angeles "if their tax burden was not significantly reduced." The companies include CareAmerica, HealthNet, Maxicare, Prudential and WellPoint, "all of which now say they intend to stay in the city" (Oliande, 5/2).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.