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States Receive More Resources to Implement Affordable Insurance Exchanges

November 30, 2011

The Department of Health and Human Services (HHS) awarded nearly $220 million in Affordable Insurance Exchange grants yesterday to 13 states to help them create insurance exchanges, giving them more flexibility and resources to implement the Affordable Care Act. The health care reform law gives states the freedom to design Affordable Insurance Exchanges – one-stop marketplaces where consumers can choose a private health insurance plan that meets their needs and have the same kind of insurance choices as members of Congress.

The Department also released several FAQs providing answers about what states need to know as they work to set up these new marketplaces. Among the FAQs are that states that run exchanges have more options than originally proposed when it comes to determining eligibility for tax credits and Medicaid. And states have more time to apply for “Level One” Exchange grants.

Yesterday’s announcement brings to 29 the number of states that are making progress in creating Affordable Insurance Exchanges. States receiving funding includde: 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,” Health and Human Services 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 information such as a summary of benefits and costs to consumers. The level of detail will focus competition between carriers which will drive costs down.

HHS also released FAQs in anticipation of state legislative sessions beginning in January 2012. Answers will help advance state policy development for exchanges. For example, they clarify that exchange grants can be used to build a state exchange that is operational after 2014; that state-based exchanges will not be charged for accessing Federal data needed to run exchanges in 2014; and that state insurance rules and operations will continue even if the Federal government is facilitating an exchange in the state. HHS will also allow greater flexibility in eligibility determinations, allowing, for example, a state-based exchange to permit the Federal government to determine eligibility for premium tax credits.

Of the 13 states awarded grants, 12 are receiving 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, is receiving a Level Two grant, which provides multi-year funding to states further along in the planning process.

Forty-nine states and the District of Columbia have already received planning grants, and 45 states have consulted with consumer advocates and insurance companies. Thirteen states have passed legislation to create an Exchange.

States have many opportunities to apply for funding. To accommodate state legislative sessions and to give states more time to apply, HHS also announced a six-month extension for Level One establishment grant applications. Applications now will be accepted until June 29, 2012 (the original deadline was December 30, 2011).

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