HHS to give states $1M each for health insurance exchanges

States can now apply for $51 million in federal money to help build health insurance exchanges. The Department of Health and Human Services wants states to create the exchanges and begin operating them in 2014 as part of the health reform law.

The principle is that if consumers have better access to plans, and the plans can be compared more competitively, prices will come down. The exchanges will be operated primarily for individuals whose employers do not offer them health insurance. States may create their own exchanges, partner with other states or be part of an HHS-created exchange. The exchanges will also function as marketplaces to sell the plans. The exchanges are expected to operate online; however, standards for the exchanges have not been developed yet. HHS is asking the public for input to establish those standards. Under the new grant program, states and the District of Columbia are eligible for up to $1 million each to develop the exchanges.