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HHS Makes Two Moves Toward Creating Insurance Exchanges

By John Reichard, CQ HealthBeat Editor

July 29, 2010 – Among the things most critical to the success of the health care overhaul law is the creation of state-based insurance exchanges. Failing that, Americans eligible for subsidies to fulfill the law’s mandate that they buy coverage won’t have a marketplace where they can find affordable coverage.

Designing and setting policy to create a successful exchange is no simple matter, however — and states are broke. But HHS announced Thursday that it’s offering $51 million in grants to help states get started, and that should help.

And in a second move, the department also issued a notice requesting public comment on standards needed to create a successful exchange.

HHS said in a news release that each state and the District of Columbia are eligible for up to $1 million in grant money to establish an exchange. Although state-based exchanges won’t open until 2014 under the law, states must begin working right way to develop policies and proposals to set up the exchanges, analysts say.

States can operate their own exchanges or partner with other states to operate a regional exchange, HHS said. ”If a state decides not to create an exchange for its residents, HHS will help establish one on their behalf,” the department added. It said that grant applications are available at their website and are due by Sept. 1, 2010.

HHS also issued a request for comment from states, consumer advocates, employers, insurers and others seeking their input on “rules and standards” exchanges should be required to meet. Those comments are due Oct. 4.

Rick Curtis, president of the Institute for Health Policy Solutions and an expert on exchanges, said the grant money is important.

The grants would give states “the ability to begin the planning and analysis of exchanges, which will play a pivotal role in assuring convenient and affordable access for consumers, coverage of the uninsured, as well as healthy competition among competing plans,” he said.

Curtis said states face a series of critical steps to create exchanges. They include designing and setting policy for the exchanges and figuring out how they will coordinate with other state agencies and function alongside the rest of the state’s insurance market. “In the context of severe budget challenges facing states, most would not otherwise have resources to take these critical initial steps,” he said.

These various planning activities “will also enable states to better identify and communicate to the federal government where related guidance and rules are needed in order for their exchanges to be viable and achieve federal and state goals,” Curtis said in a statement.

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