Business & Real Estate

Governor’s veto is setback to VSP’s hopes to sell through Covered California

Gov. Jerry Brown has vetoed a bill that Rancho Cordova’s vision insurer, VSP Global, says was necessary to let it sell coverage through the state-run health care marketplace, Covered California.

Brown on Thursday vetoed Assembly Bill 1877, which VSP says was an essential mechanism to providing access to millions of uninsured Californians.

VSP, the parent of Vision Service Plan, reacted with outrage.

“We are surprised and shocked the governor vetoed AB 1877,” said Rob Lynch, president and chief executive. He noted that the bill, by Assemblyman Ken Cooley, D-Rancho Cordova, passed the Assembly and Senate unanimously.

Brown’s veto appears to tear open an old wound – although it apparently won’t prompt the company to reverse course on an expansion in the Sacramento area that was announced months ago.

In 2012, the governing board of Covered California, the electronic marketplace created in response to the federal Affordable Care Act, was finalizing its rules. It had decided not to let “stand-alone” companies like VSP, which provide only vision care insurance, sell coverage to individuals.

Lynch protested and said he was putting on hold a significant expansion of the company’s operations in the Sacramento area. A slew of elected officials and business leaders urged the state agency to reconsider.

Eventually, the Covered California board reversed course and voted to let VSP and other stand-alone insurers into the market for individuals. VSP gave its expansion the green light.

But because of a wrinkle in federal law, the agency later realized that stand-alone vision plans couldn’t be sold through an exchange, according to a legislative analysis of AB 1877.

Cooley’s bill would have established a new entity, called the California Vision Care Access Council, to create a separate website for vision coverage. The bill was seen as a way to work around the federal regulations and give stand-alone insurers a way to sell coverage. Insurers would have put up the money to run the operation.

Brown, however, said the bill would lead to creation of an unnecessary “new state bureaucracy.”

Making good on its pledge to expand in the region, VSP earlier this year broke ground on a lens-grinding facility in Folsom expected to create 200 to 250 manufacturing jobs. Along with insurance, VSP makes eyeglasses. It employs more than 2,000 workers in the region.

A company official, who requested anonymity because he wasn’t authorized to speak about the issue, said it appears the expansion will continue despite the company’s displeasure with Brown.

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