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HHS Awards 13 States $185 Million to Build Exchanges

By Jane Norman, CQ HealthBeat Associate Editor

August 12, 2011 -- States don’t have forever to ponder their choices in creating health insurance exchanges under the health care law—and to help push that process along, 13 states and the District of Columbia were awarded $185 million in grants Friday to fund their efforts in developing exchanges.

Three states previously were awarded the “establishment grants,” which go to actually build exchanges as distinct from planning them. Forty-nine states previously received planning grants.

A third category of exchange funding is “innovator grants,” which have gone to seven states to develop information technology systems all states can draw on in developing exchanges.

Despite condemnation of the law by the Tea Party, Republicans are in the governor’s seat in two of the 13 states that received establishment grants Friday—Haley Barbour in Mississippi and Brian Sandoval in Nevada. Both states are also involved in a multistate suit filed against the law. But Barbour and Sandoval have not been resistant to putting the law in place pending a final decision on the legal challenge.

Not every Republican is accepting federal funds for exchanges, though. Two of the seven states awarded innovator grants have returned them. Earlier this week, GOP Gov. Sam Brownback of Kansas returned a $31.5 million “early innovator” grant that was to pay for state exchange development there, saying less costly approaches are needed to deal with problems in the health care system. Oklahoma previously returned its innovator grant.

The grants awarded Friday by the Department of Health and Human Services will be used to create marketplaces to make a menu of health insurance available to individuals and small businesses beginning in 2014.

States may apply for establishment grants through June 2012, with open enrollment for exchanges anticipated to launch in the fall of 2013.

“This means that much of the work in preparation for open enrollment needs to be completed earlier in 2013,” HHS Secretary Kathleen Sebelius wrote to the nation’s governors in announcing the new grants. “As such, I encourage states to have a fully developed grant strategy by early 2012.”

The grants can be used to help states determine whether they will have their own exchanges, partner with the federal government or rely on a federal exchange, she said.

The next deadline for applications is Sept. 30.

The grants awarded:

  • California, $38.4 million. 
  • Connecticut, $6.6 million. 
  • District of Columbia, $8.2 million. 
  • Illinois, $5.1 million. 
  • Kentucky, $7.6 million. 
  • Maryland, $27.1 million. 
  • Minnesota, $4.1 million. 
  • Mississippi, $20.1 million. 
  • Missouri, $20.8 million. 
  • Nevada, $4 million. 
  • New York, $10.7 million. 
  • North Carolina, $12.3 million. 
  • Oregon, $8.9 million. 
  • West Virginia, $9.6 million.

Indiana, Rhode Island and Washington were the three other states that received establishment grants earlier this year.

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