California Legislation Creates Co-ops

California Co-ops (AP Photos/Eric Risberg) California Co-ops (AP Photos/Eric Risberg)

The California state legislature has passed a bill that establishes a regulatory oversight and licensing framework for consumer-owned and-operated health care plans, or co-ops.

The bill is S.B. 1846. It was strongly supported by the State Insurance Department. It now goes to Gov. Jerry Brown for signature.

“I am pleased that the Legislature passed this important bill which establishes a licensing framework for CO-OPs,” said insurance commissioner Dave 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.”

The bill implements a provision of the Patient Protection and Affordable Care Act.

The bill would also make co-ops in California eligible for federal grants.

Under the health care law, 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 by the Department of Health and Human Services.

Congress sought through the measure to encourage the creation of co-ops by non-profit groups as an economical alternative to current health plans, which provide greater services but at a cost far higher than can be provided by co-ops.

Health care analysts cite co-ops as a boon to the self-employed, who can pay hundreds of dollars per month to provide their own health coverage. 

The country's largest co-op is Health Partners, a Minnesota-based co-op. It offers traditional comprehensive coverage for as low as $88 a month. 

Not everything is covered by a co-op plan, however. Hospital visits are typically not covered, though a few hospitals participate, according to consultants.

However, conservatives point to co-ops as one of their pet peeves about the healthcare reform law.

House Republicans have repeatedly tried to cut off funding for these programs, and the House Oversight Committee recently announced it would investigate an estimated $845 million announced so far in subsidized loans to 10 CO-OPs operating in 10 states, citing a potential default rate as high as 50 percent.

Assembly member Richard Gordon, D, one of the primary sponsors of the bill, said it deals with “one of the most pressing issues facing Californians--the lack of available options for obtaining affordable health coverage.”

Gordon, who serves on the Assembly Health Committee, added that,. “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.”






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