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CA Department of Insurance

Insurance Commissioner Dave Jones Announces Passage Of Bill To Create Non-Profit Health Insurance Plans

News: 2012 Press Release

For Release: August 30, 2012
Media Calls Only: 916-492-3566
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Insurance Commissioner Dave Jones Announces Passage Of Bill To Create Non-Profit Health Insurance Plans
Commissioner Urges Governor to Sign AB 1846 into Law

Insurance Commissioner Dave Jones today announced that the California State Legislature has passed AB 1846, authored by Assembly Member Richard Gordon (D-Menlo Park). The measure is sponsored by Commissioner Jones and the California Department of Insurance (CDI). It would establish Consumer Owned and Operated Plans (CO-OPs) as outlined under the Affordable Care Act (ACA). The bill also gives CDI the necessary oversight to regulate these new non-profit health insurers.

"I am pleased that the Legislature passed this important bill which establishes a licensing framework for CO-OPs," said Commissioner Jones. "These CO-OPs are a help to California consumers by returning surplus revenue to members in the form of lower premiums, lower cost-sharing and expanded benefits."

"One of the most pressing issues facing Californians is the lack of available options for obtaining affordable health coverage," said Assembly Member Gordon, who serves on the Assembly Health Committee. "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 option available to these individuals and families."

A CO-OP is a new type of non-profit health insurer or health maintenance organization that is directed by its customers, uses profit for customers' benefit, and is designed to offer individuals and small businesses affordable, customer-friendly, and high-quality health insurance options. They must be licensed as insurers in each state in which they operate and are subject to state laws and regulations that apply to all similarly situated issuers.

AB 1846 establishes a regulatory oversight and licensing framework for CO-OPs so California's non-profit organizations can participate in the program and receive federal funding. Under the ACA, those seeking to form a CO-OP may apply for $3.8 billion in federal funds in the form of low interest loans. To date, 19 non-profits, offering coverage in 18 states, have been awarded over $1 billion dollars.

"I urge Governor Jerry Brown to sign this important consumer protection measure that would offer more competition in the healthcare delivery system," said Commissioner Jones.

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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