Members of the California Assembly Health Committee voted 13-6 earlier this week to approve A.B. 1846, a bill that would establish the laws that would govern the new “CO-OP” health plans in California.
The committee referred A.B. 1846 to the Assembly Appropriations Committee.
The drafters of the Patient Protection and Affordable Care Act of 2010 (PPACA) created the Consumer Operated and Oriented Plan (CO-OP) program to program in an effort to increase the level of competition in the health insurance market.
A.B. 1846 calls for California to put CO-OP plans under the jurisdiction of the California Department of Insurance and to handle CO-OP plans much the same way it handles existing policyholder-owned mutual insurers, Assembly legislative analysts say in a CO-OP bill analysis.
One difference between a CO-OP plan and a mutual insurer would be that the state would treat federal CO-OP “solvency loans” as surplus rather than as loans.
PPACA Section 1322
PPACA Section 1322 calls for the plans to sell coverage through the new PPACA health insurance exchange system and get “substantially all” of their business from individuals and small groups.
A CO-OP plan could operate in a whole state or in part of a state, or in multiple states. A CO-OP would be licensed as an insurer in each state in which it operates.
A qualified CO-OP plan could have easier access to the new PPACA health insurance exchanges, or Web-based health insurance supermarkets, that are supposed to start selling coverage to individuals and small groups in 2014.
Although a CO-OP plan would offer coverage through the exchange system, it also could sell coverage outside of an exchange.