BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
AB1846 (Gordon) - Consumer operated and oriented plans.
Amended: June 28, 2012 Policy Vote: Health 5-3,
Insurance 5-3
Urgency: No Mandate: Yes
Hearing Date: August 6, 2012
Consultant: Brendan McCarthy
This bill does not meet the criteria for referral to the
Suspense File.
Bill Summary: AB 1846 would establish in law a licensing
framework for consumer operated and oriented plans (CO-OPs) to
provide health care coverage under the Department of Managed
Health Care and/or the Department of Insurance.
Fiscal Impact:
One-time costs to the Department of Managed Care to develop
policies and adopt regulations of about $90,000 (Managed
Care Fund).
One-time costs to the Department of Insurance to develop
policies and adopt regulations of about $80,000 (Insurance
Fund).
Minor ongoing costs for enforcement (Managed Care Fund and
Insurance Fund) as the number of CO-OPs seeking licensure in
the state is likely to be small.
Background: The federal Patient Protection and Affordable Care
Act (Affordable Care Act) authorizes the creation of consumer
operated and oriented plans (CO-OPs). Under the Affordable Care
Act, CO-OPs are defined as non-profit, member-run health
cooperatives. A CO-OP must be a new organization, cannot be
sponsored by a government agency, must meet conflict of interest
standards, must operate with a consumer focus, and must meet all
applicable state requirements.
The Affordable Care Act makes $6 billion in funding available
for startup loans to CO-OPs.
AB 1846 (Gordon)
Page 1
Proposed Law: AB 1846 would establish in state law the licensing
framework for CO-OPs, in both Health and Safety Code (enforced
by the Department of Managed Health Care) and the Insurance Code
(enforced by the Department of Insurance). The provisions of the
bill incorporate federal requirements on CO-OPs into state law.
Under the bill, CO-OPs seeking licensure would be required to
meet the same standards as other health plans or health
insurers, pay the same fees, and be subject to the same
regulatory requirements.
The bill would place in law specific requirements on CO-OPs,
such governance rules, membership rules, and conflict of
interest provisions.
The bill would authorize both the Department of Managed Health
Care and the Department of Insurance to adopt regulations to
implement the provisions of the bill.
Related Legislation:
AB 1453 (Monning) would designate the Kaiser Small Group
HMO as the state's essential health benefit benchmark plan.
That bill will be heard in this committee.
AB 1461 (Monning) would require health plans to comply with
federal requirements in the individual market. That bill
will be heard in this committee.
SB 951 (Hernandez) would designate the Kaiser Small Group
HMO as the state's essential health benefit benchmark plan.
That bill is in the Assembly Appropriations Committee.
SB 961 (Hernandez) would require health plans to comply
with federal requirements in the individual market. That
bill is in the Assembly Appropriations Committee.
Staff Comments: Because the only costs that may be incurred by a
local government agency relate to crimes or infractions, the
bill does not create a reimbursable state mandate.