The Legislature passed AB 1846, which establishes Consumer Owned and Operated Plans (CO-OPs), as outlined under the Affordable Care Act (ACA). AB 1846 establishes a regulatory framework for CO-OPs so that non-profit organizations can participate in the program and receive federal funding.
CO-OPs are private, non-profit health insurers whose boards of directors are made up of CO-OP customers. Members elect the board of directors. CO-OPs must use their profits to lower premiums; improve health benefits and quality of health care; expand enrollment; or otherwise contribute to the stability of coverage for members. As non-profit health insurers or HMOs, CO-Ops are subject to the same state laws and regulations that apply to all similarly situated issuers.
By January 1, 2014, consumers will be able to buy a CO-OP health plan through an Affordable Insurance Exchange. Consumers may also be able to buy a plan outside of an exchange. A CO-OP could sell coverage to small businesses. Small business owners would be able to go through a new competitive insurance marketplace for small businesses known as a Small Business Health Option Program (SHOP).
On December 8, the Dept. of Health and Human Services (HHS) issued final standards for establishing CO-OP health insurance plans. Eligible organizations seeking to establish a CO-OP can apply for low interest loans to fund start-up costs and meet solvency requirements. The first round of loan applications was due on October 17, 2011 with subsequent quarterly application deadlines through December 31, 2012. To date, 19 non-profits, offering coverage in 18 states, have been awarded over $1 billion dollars.
