With Governor Brown’s signature on AB 1846, California can now move forward with the development of Consumer Oriented and Operated Plans (CO-OP): health insurance programs for small groups and businesses. Authorized for initial funding under the Affordable Care Act, many states, like California, could not take advantage of the non-profit health insurance CO-OPs until certain regulatory legislation was in place.
New Model, new savings?
The new CO-OPs could be a strong alternative to small group plans offered through traditional private health insurance companies and the emerging California Health Benefits Exchange. Similar cooperative health insurance ventures have been tried and failed in California in the past. There is an expectation that under the new rules and expanded market, the new non-profit cooperatives will succeed in offering California business a competitive and industry focus health insurance plan.
Below is the press release issued by Insurance Commissioner Dave Jones.
AB 1846 (Chapter 859, Statutes of 2012) authored by Assembly Business, Professions, and Consumer Protection Committee Chair Rich Gordon (D-Menlo Park). AB 1846 establishes a new regulatory licensing framework over Consumer Owned and Operated Plans (CO-OPs), a new and unique form of an insurer never before licensed in California, by giving CDI the necessary oversight to regulate these new non-profit health insurer organizations. CO-OPs are designed to foster the creation of consumer-driven, nonprofit health insurance issuers to offer quality health products where they are so critically needed: in the individual and small group markets. In order to encourage the creation of CO-OP health organizations, the federal government has been awarding low-interest start-up and solvency loans to qualified nonprofit entities; to date, more than 20 established CO-OPs located in more than 20 states have been granted more than $1.6 billion in low-interest loans out of a total of $3.8 billion available in federal loan funds. AB 1846 facilitates the fostering of a CO-OP in California to serve consumers both inside and outside of the state’s Health Benefit Exchange as well as offer more competition in the healthcare delivery system. With the goal of providing insurance options to nearly one million low-income Californians in need of affordable health care, CO-OPs can serve as one affordable option available to these individuals and families.