HHS Expands Health Insurance Exchange GrantsHHS Expands Health Insurance Exchange Grants

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The Department of Health and Human Services (HHS) will offer a new funding opportunity to help states continue their work to implement health insurance exchanges, a key provision of the Affordable Care Act.

Announced last week, HHS officials said states can use the Exchange establishment grants for a number of different activities, including conducting background research, consulting with stakeholders, making legislative and regulatory changes, governing the exchange, establishing IT systems, conducting financial management, and ensuring program integrity.

HHS secretary Kathleen Sebelius said in a statement that states are moving forward and are implementing the Affordable Care Act to make reform a reality. "These grants will help ensure states have the resources they need to establish exchanges and ensure Americans are no longer on their own when shopping for insurance," said Sebelius.

When the Affordable Care Act is fully implemented in 2014, health insurance exchanges will provide individuals and small businesses with a "one-stop shop" to find and compare affordable, high-quality health insurance options. The information will be posted online in each state.

By allowing individuals and small businesses to band together to purchase insurance, exchanges are expected to lower costs. HHS said greater competition will be generated when the exchanges create transparency in the insurance market, enabling consumers to compare plans based on price and quality.

The Exchange establishment grants also recognize that some states are making progress toward establishing health insurance exchanges faster than others. To help states move forward on their own timetables, states that are moving ahead more rapidly can apply for multi-year funding, while states that are making progress in establishing their exchange through a step-by-step approach can apply for funding for each project year. Moving forward, states will have multiple opportunities to apply for funding as they develop their exchanges.

States are already taking their first steps toward 2014 when exchanges must be operational. For example, California signed first-in-the-nation legislation to implement an exchage under the Affordable Care Act on September 30, 2010. Maryland's Health Reform Coordinating Council has carried out research to understand the state's health insurance marketplace and health expenditures, as well as to make health care costs and quality more transparent. Colorado is holding regular community forums on issues around developing a health insurance exchange, as well as conducting extensive research and economic analyses on the state's health insurance market.

Many of those activities have been funded by the $49 million in Exchange planning grants awarded by HHS in July 2010. States applied to use those grants for a number of important planning activities, including research to understand their insurance markets, efforts to obtain the legislative authority to create exchanges, and steps to establishing the governing structures of exchanges.