Feds will give 11 states $1.5 billion to develop health insurance marketplaces

Health and Human Services Secretary Kathleen Sebelius announced that 11 states would receive nearly $1.5 billion in Exchange Establishment Grants to build insurance marketplaces as part of the 2010 Affordable Care Act.

In a statement released on Thursday, Sebelius said that the money was intended to ensure that the recipient states had “the resources necessary” to build these insurance exchanges. California, Delaware, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, New York, North Carolina, Oregon and Vermont all will receive funds.

“These states are working to implement the health care law and we continue to support them as they build new affordable insurance marketplaces,” Sebelius said.

Even with the new money, states could find the cost savings anticipated under the new health care law elusive. According to a new study by the RAND Corp. published in the January issue of Health Affairs, much of the $81 billion in expected savings from the digitization of health records has not yet materialized. The RAND analysts cited interoperability issues, slow adoption and failures by health care providers to reengineer key processes. Still, one healthcare management consultant told Nextgov that health IT’s setbacks did not detract from its other benefits, like better patient safety, and reduction of medical errors.