Regulatory Oversight of Health Insurance in California

Deborah Reidy Kelch


This is archived content; for historical reference only.

The business of health insurance in California is subject to a complex patchwork of federal and state regulations. Different rules apply depending on whether insurance coverage is purchased directly by individuals or on behalf of a group, as in employment-based health insurance. Among groups, rules differ and are dependent on group size. Finally, rules and consumer protections vary based on how employers choose to cover the health costs of their employees — either by paying claims costs directly or by purchasing health insurance coverage through a state-regulated insurance carrier. This complexity can make it difficult for purchasers and consumers to understand which rules and protections apply to their health coverage.

As a general principle, the business of health insurance is regulated by the states. However, one federal law, known as ERISA (Employee Retirement Income Security Act), has far-reaching implications that limit when and how states may regulate health coverage provided by private employers. This issue brief highlights federal ERISA rules and key California laws regulating health coverage. It also identifies how the different regulatory schemes affect the legal protections available to consumers covered by different types of plans.

The complete issue brief is available under Document Downloads below.

The overview presented here is a summary of the detailed findings included in two prior California HealthCare Foundation reports: Regulation of ERISA Plans: The Interplay of ERISA and California Law (2002); and Making Sense of Managed Care Regulation in California (2001). These reports are available under Related CHCF Pages below.