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HHS Gives Conditional Approval to Three States for Exchanges

By Rebecca Adams, CQ HealthBeat Associate Editor

December 20, 2012 – The Department of Health and Human Services recently said that they believe three more states have demonstrated that they will be ready to open exchanges in 2014, including one that will operate through a partnership with the federal government.

HHS issued conditional approvals to Delaware, Minnesota and Rhode Island. Delaware is the first partnership exchange to win a conditional approval.

Last week, HHS officials said they have deemed that Colorado, Connecticut, the District of Columbia, Kentucky, Massachusetts, Maryland, New York, Oregon and Washington will be ready to operate state-based exchanges in time for open enrollment in October.

So far, about half of the states are reserving their option to rely on the federal government to operate exchanges in their areas. Eighteen states and the District of Columbia told HHS officials by last week's deadline that they plan to set up their own state-based health insurance markets.

Another five—Delaware, Arkansas, Illinois, Iowa and North Carolina—have said they will operate a hybrid exchange in partnership with federal officials.

State officials still have until Feb. 15 to notify HHS that they would like to pursue a partnership. Analysts are watching to see whether states such as New Jersey and Virginia will eventually decide to work under a partnership model.

Under the health care law (PL 111-148, PL 111-152), HHS is supposed to issue all conditional approvals by Jan. 1 for exchanges that can start enrolling people in October for the year beginning Jan. 1, 2014. HHS officials had asked the states for their decisions earlier but extended the deadlines after governors complained that they did not have enough details to make informed choices.

HHS officials have said that states will still have some control over their markets, even where the federal government is overseeing the exchange. For instance, in a question-and-answer document issued on Dec. 10, HHS officials said federal officials could consult state reviews in places that have effective processes rather than try to have HHS officials decide alone whether plans should be allowed to offer coverage on exchanges.

"States across the country are working to implement the health care law and build a marketplace that works for their residents," HHS Secretary Kathleen Sebelius said in a written statement. "In 10 months, consumers in all 50 states will have access to a new marketplace where they will be able to easily purchase quality health insurance plans."

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