HHS Awards State Health Insurance Exchange Dollars

The Department of Health and Human Services (HHS) awarded nearly $220 million to 13 states to help them set up insurance exchanges under the Patient Protection and Affordable Care Act (ACA). States were also allowed additional time to apply for future grants while HHS stipulated that states who create their own internet-based exchanges must be operational in all states in 2014.

The recent awards bring to 29 the number of states that have made significant progress in creating Affordable Insurance Exchanges.  States that received funding include Alabama, Arizona, Delaware, Hawaii, Idaho, Iowa, Maine, Michigan, Nebraska, New Mexico, Rhode Island, Tennessee, and Vermont.  “We are committed to giving states the flexibility to implement the Affordable Care Act in the way that works for them,” HHS Secretary Kathleen Sebelius said.  “Exchanges will give consumers more choices and make it easy to compare and shop for insurance plans.”  In the new Exchanges, insurers will provide an easily understandable summary of benefits and costs to consumers.  The level of detail will hone competition between carriers, which is expected to make coverage more affordable.

It’s interesting to note that despite extensive opposition to the ACA, a majority of states have now accepted federal funding to establish health insurance exchanges.  Alaska is the only state that hasn’t applied for federal grants.

Of the 13 states that received this new round of grants, 12 are Level One grants, which provide one year of funding to states that have already made progress using their Exchange planning grant.  The 13th state, Rhode Island, received the initial Level Two grant, which provides multi-year funding to states that have made significant progress in the planning process.  Forty-nine states and Washington, D.C. have already received planning grants; 45 states have consulted with consumer advocates and insurance companies.  Thirteen states have passed legislation to create an Exchange.

The money is intended to provide the states with adequate flexibility and resources to deploy the marketplaces where consumers can shop and compare for a private health insurance plan that fits their needs.  The exchanges are slated to go live just two years from now.

According to Chiquita Brooks-LaSure, HHS director of coverage policy, “We continue to urge all states to establish their own exchanges and move forward with their implementation…while waiting for the Supreme Court to rule.”  The exchanges are a “bipartisan concept,” and states know that if they don’t establish an exchange by 2014, HHS will create one for them. She is “confident the law will be upheld.”  Sebelius said that as a former governor, state insurance commissioner and legislator, she understands “the importance of letting states lead” in creating their own version of a transparent healthcare system in which “insurance companies will have to compete for customers.  That means lower prices and better quality in the same marketplace in which members of Congress will have to shop for their coverage.”

The latest grants come nearly a month after the National Association of Insurance Commissioners asked HHS for greater flexibility in setting up the exchanges, suggesting state insurance commissioners might miss critical deadlines because they lack adequate funding and staff.  Additionally, HHS will delay by six months the deadline for states to apply for more federal funding to help run the exchanges.  HHS also will offer federal aid to states that miss deadlines.

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