HHS sweetens the pot for states building health exchanges

A critical piece of the health care reform law requires states to have health insurance exchanges in place by 2014, giving people and small businesses an online portal where they can shop for insurance plans and buy coverage.

To the federal government, the exchanges are essential to making reform work. To the states, the requirement has presented a difficult, unfunded mandate, coming at a time when revenues and state budgets are down.

The Health and Human Services Department on Friday offered some help, announcing a grant program that will fund up to five states or consortiums of states to build exchanges that HHS hopes will serve as models for other states.

HHS said in a release that two-year “Early Innovators” grants will be awarded in February to states or coalitions that “have ambitious yet achievable proposals that can yield IT models and best practices that will benefit all states.”

Also in February, HHS plans to make grants available to support the ongoing implementation of the systems.

HHS hasn’t decided how much money will be available, Jennifer Haberkorn writes in Politico. “We didn’t want to put a constraint on it,” Joel Ario, director of health insurance exchanges at HHS’s Office of Consumer Information and Insurance Oversight, told Haberkorn.

Under the health care reform law, the federal government would run the exchange for any state unable to build one, but HHS is encouraging states to run their own. In September, the Obama administration awarded 49 grants of $1 million to states and the District of Columbia to begin work on the exchanges (Alaska and Minnesota turned down the money), the Los Angeles Times reported.

In September, California got started on what would likely be the nation’s largest health exchange when Gov. Arnold Schwarzenegger signed legislation calling for its establishment, the San Francisco Chronicle reported. Massachusetts and Utah already have exchanges in place.