California took a small step toward instituting a new type of health insurance plan in the state — a not-for-profit, member-governed plan dubbed the Consumer Operated and Oriented Plan, or CO-OP.

The new bill was introduced to the Senate in last week’s Senate Committee on Health hearing. AB 1846 by Assembly member Rich Gordon (D-Menlo Park) would pave the way for California to apply for some of the $3.8 billion the federal government is planning to loan to states to start CO-OPs. So far, 12 states have started the process.

“It’s a new type of health insurance, intended to offer affordable, consumer- friendly coverage … in the individual and small group market,” Gordon said. “This bill streamlines the licensure process, and allows California to take part in this program, and tap federal dollars.”

One concern with the CO-OP program in California has been whether it might step on the toes of the Health Benefit Exchange. That point was made at the hearing by Beth Capell, legislative advocate for Health Access California: “We have to make sure we reconcile it with our exchange,” Capell said. “A co-op cannot undercut the authority of the exchange.”

David Chase, state outreach director for the Small Business Majority, said the co-op opportunity in AB 1846 could provide coverage for another segment of the population.

“This will inject additional choice into the market, and that’s a good thing for small businesses,” Chase said.

The bill passed the Senate Committee on Health on a 5-3 vote, and now heads to Senate Appropriations.