Obama Administration begins insurance exchange roll-out

The Departments of Health and Human Services (HHS) and Treasury have begun the next steps to establish health insurance exchanges–marketplaces where consumers can choose a private health insurance plan that fits their health needs, similar to the kind of insurance choices as members of Congress. Among other policies, the proposed rules describe how middle-class families will gain access to tax relief to potentially reduce the cost of coverage.

Since President Barack Obama signed the Patient Protection and Affordable Care Act (PPACA) on March 23, 2010, more than half of the states have taken action to build an exchange. Today, HHS awarded $185 million to 13 states and the District of Columbia to help them build health insurance exchanges and, with Treasury, posted three proposed rules that will provide a path for consumers to use the exchanges to purchase private health insurance. Additionally, HHS Secretary Kathleen Sebelius sent a letter to the U.S. governors laying out options and resources available to states to set up their exchanges.

“We’re laying the foundation to provide tax incentives to help working families purchase health insurance,” said Treasury Secretary Tim Geithner.

PPACA creates health insurance exchanges that will allow eligible individuals, families and small businesses to shop for coverage starting in 2014. More than half the states have already taken action to begin building an exchange and the new grant awards will accelerate that progress.

The Exchange Establishment grants awarded last week build on earlier investments in states, according to the agencies. In 2010, HHS awarded 49 states and the District of Columbia $50 million to begin planning their exchanges. HHS expects to make more grant awards in the coming months.

The three proposed rules released by HHS and Treasury focus on the following:

• Access to Coverage for Consumers and Small Businesses: New rules will “make it easy for consumers to enroll in health plans and get help paying for health coverage through premium tax credits and cost sharing reductions,” the Treasury and HHS reported. Small employers participating in the Small Business Health Options Program will be able to offer their employees a choice of health plans and cut their costs with new tax credits.
• Health Insurance Premium Tax Credit: Individuals and families will receive tax credits to help defray insurance costs, increasing access to health coverage for millions of U.S. middle class families, according to the agencies.
• Medicaid Eligibility: Coordinating the exchange with Medicaid and Children’s Health Insurance Program eligibility will make enrollment “seamless for qualified Americans and reduce the administrative burden on states,” the departments said.

In the letter to U.S. governors, Sebelius laid out a partnership that will allow states to work with HHS to set up exchanges while making more efficient use of shared resources. The letter solicited comments from states on how the partnership model can build on the substantial flexibility states have when designing an exchange that works for them.

In the weeks ahead, the Obama Administration said it will conduct an outreach campaign and ask for public comment on the three proposed rules from employers, consumers, state leaders, healthcare providers and insurers and U.S. citizens. In addition to accepting written public comments for the next 75 days, the departments will hold forums. These forums will be held in: Atlanta, Chicago, Denver, New York City, Portland, Ore., and Sacramento, Calif.

The departments expect to modify the proposed rules issued based on the feedback they receive from the U.S. public.

To view a detailed list of states that received grants, visit here.