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States Receive More Flexibility, Resources to Create Insurance Exchanges
More than half of states are creating marketplaces to help small businesses buy insurance

By Stephen Miller, CEBS  12/1/2011
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The U.S. Department of Health and Human Services (HHS) announced on Nov. 29, 2011, it had awarded nearly $220 million in grants to 13 states to help them create health insurance exchanges under the Patient Protection and Affordable Care Act (PPACA).

The exchanges are meant to be one-stop marketplaces where consumers and small businesses can purchase private health insurance plans. The law requires that an exchange “must be a governmental or nonprofit entity that is established by the state government,” and that state-run exchanges be operational by Jan. 1, 2014. If a state does not have an exchange running by that date, HHS would create and maintain an exchange for the state. 

The 13 states awarded grants on Dec. 1, 2011—Alabama, Arizona, Delaware, Hawaii, Idaho, Iowa, Maine, Michigan, Nebraska, New Mexico, Rhode Island, Tennessee and Vermont—bring to 29 the number of states that HHS said were making significant progress in creating exchanges. In addition, 49 states and the District of Columbia have received planning grants.

Questions Answered

In addition, HHS released several frequently asked questions (FAQs) providing answers to key questions state officials need to know as they work to set up these new marketplaces. For example, the FAQs clarify that state insurance rules and operations will continue even if the federal government is facilitating an exchange in the state and that HHS will 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.

“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 in a released statement.

All States Not Onboard

Not all states are rushing to create exchanges, however. "There’s really no first-mover advantage for states to jump into this, especially when we don’t know what’s going to happen next summer [in 2012, when the U.S. Supreme Court is set to rule on the constitutionality of key parts of the PPACA] and in the election,” Tony Keck, director of South Carolina’s Department of Health and Human Services, told the Washington Times on Nov. 29, 2011.

Seven of the 13 states that received grants on Nov. 29 are among the 28 states suing the administration over the constitutionality of the law.

Stephen Miller, CEBS, is an online editor/manager for SHRM.

Related Articles—SHRM:

Agencies Issue Proposed Rules on State Exchanges, Premium Subsidies, SHRM Online Benefits Discipline, August 2011

Health Care Exchanges Will Alter Competition and Choice, HR News, March 2010

Related Article—External:

No Consensus Among States on Tack for Health Law, Washington Times, November 2011

Quick Links:

SHRM Online Benefits Discipline

SHRM Online Health Care Reform Resource Page
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