HHS rolls out new grants for state health care exchanges

Continuing its push to help states establish the health insurance exchanges under the 2010 Affordable Care Act, the Health and Human Services Department on Tuesday announced 13 new grant awards totaling $220 million.

The department is providing cash and administrative guidance to encourage states to prepare exchanges to be operational by January 2014, even as the country awaits a Supreme Court ruling on the constitutionality of the 2010 health care reform law.

"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 during a conference call with reporters. "Exchanges will give consumers more choices and make it easy to compare and shop for insurance plans."

Sebelius said the announcement, which included a new set of frequently asked questions to clarify policy for states in time for their January legislative sessions, "is exciting for two reasons." Thirteen states are taking "another major step" in using the funds for "everything from getting stakeholder input to helping shape the exchange to hiring staff to make sure the exchange works seamlessly with their Medicaid programs," she said. The second reason is that Rhode Island "became the first state to receive a Level 2 grant."

Rhode Island qualified for the $58 million award, according to Chiquita Brooks-LaSure, HHS director of coverage policy, because it was the first to apply for the more advanced Level 2 grant and because "it is at the forefront" of readiness to set up a health insurance exchange. Rhode Island has "established an information technology infrastructure, a consumer support system, a government structure and staffing and multiyear commitment," she said.

Twenty-nine states as of Tuesday have met HHS' criteria for "significant progress in creating affordable insurance exchanges," while 49 and the District of Columbia have received planning grants.

The 12 that won Level 1 grants this week are Alabama, Arizona, Delaware, Hawaii, Idaho, Iowa, Maine, Michigan, Nebraska, New Mexico, Tennessee and Vermont.

"We continue to urge all states to establish their own exchanges and move forward with their implementation . . . while waiting for the Supreme Court to rule," Brooks-LaSure said. The exchanges are a "bipartisan concept," and states know that if they don't establish an exchange by 2014, HHS will create one for them. She added that she is "confident the law will be upheld."

Sebelius said that as a former governor, state insurance commissioner and legislator, she knows "the importance of letting states lead" in creating their own version of a transparent health care system in which "insurance companies will have to compete for customers. That means lower prices and better quality," she said, "in the same marketplace in which members of Congress will have to shop for their coverage."

Sebelius stressed that insurers will have to spend more on medical care and less on advertising and executive salaries, noting that just last week, HHS rejected a premium hike proposed by a Pennsylvania insurer.

To give states more time to apply for grants, HHS also announced it is planning two additional rounds of awards next year and is extending the deadline for Level 1 grants from Dec. 30, 2011, to June 29, 2012.