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Insurance Commissioner Dave Jones Applauds Passage of AB 1846 by California Assembly Health Committee

News: 2012 Press Release

For Release: April 25, 2012
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Insurance Commissioner Dave Jones Applauds Passage of AB 1846 by California Assembly Health Committee
Bill would establish the Consumer Operated and Oriented Plans (CO-OP)

Insurance Commissioner Dave Jones today announced that the California Assembly Health Committee has passed AB 1846, authored by Assembly Member Richard Gordon (D-Menlo Park), by a vote of 13 to 6. AB 1846 is sponsored by Commissioner Jones and the California Department of Insurance (CDI). The bill would establish a licensing framework for CO-OPs, or Consumer Operated and Oriented Plans, thus providing CDI with the necessary regulatory oversight over these new non-profit health insurers.  

"I am pleased that the Assembly Health Committee has passed this important legislation to establish the CO-OP licensing framework," Commissioner Jones said. "This legislation will enable California to offer more affordable, quality insurance products in the Health Benefits Exchange, thus providing consumers with competitive, lower premiums."

This proposal seeks to establish a licensing framework for CO-OPs. With respect to an insurer CO-OP applicant, this proposal draws upon the Insurance Code's provisions establishing a licensing scheme for mutuals while also requiring a CO-OP to achieve and maintain full compliance with the ACA.

Specifically, this proposal will:

  • Define a CO-OP as a non-profit, member-run health insurance issuer that will be newly licensed under state law to offer qualified-health plans (QHPs) in the individual and small group market. CO-OPs, once licensed, will be allowed to sell health plans both inside and outside the Health Benefit Exchange. This bill would further mandate that a CO-OP must adhere to the Health Benefit Exchange's standards and its selective contracting requirements, including rate negotiations.
  • Require CO-OPs to be member-run- meaning that governance of the organization is subject to a majority vote of its members. CO-OPs will also be required to be subject to strict conflict of interest rules and public disclosure requirements.
  • Require CO-OPs to be non-profit entities. Any profits are to be used to lower premium and improve member benefits. 
  • Require CO-OPs to be subject to all state licensing requirements that would be imposed upon any other health insurer today, including state reserve and licensing requirements.

The bill now heads to the Assembly Appropriations Committee for consideration.

The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $310 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $469 million in claims and premiums. Please visit the Department of Insurance website at Non-media inquiries should be directed to the Consumer Hotline at 800.927.4357. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.

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