States to Get Funding for Health Insurance Exchange Models

The U.S. Department of Health and Human Services will award grants to construct online insurance marketplaces that could become models for all states.

by / November 1, 2010
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The U.S. Department of Health and Human Services (HHS) will award grants in order to help states build models for the online insurance marketplaces that are mandated by the Barack Obama administration’s health-care overhaul.

The one-stop websites, scheduled to be online by 2014, will allow citizens to compare pricing and coverage for health insurance and enroll in a plan that satisfies government requirements.

Some facets of the marketplaces could be modeled after existing websites in the only two states that have them: the Utah Health Exchange and the Massachusetts Health Connector.

The HHS announced Friday, Oct. 29, that up to five Early Innovator  grants will be competitively awarded to states that “demonstrate leadership in developing cutting-edge and cost-effective consumer-based technologies, and models for insurance eligibility and enrollment for [health insurance] exchanges.” The grant winners will be announced in February.

“States are developing cutting-edge innovative systems to deliver cost-effective and consumer friendly care to families and small businesses,” said Joel Ario, director of the Office of Health Insurance Exchanges within the HHS’ Office of Consumer Information and Insurance Oversight.  “By encouraging and rewarding states for their innovation, we can build and leverage models that can be adopted and tailored by other states, and generate taxpayer savings across the board.”

Modernized IT systems will be critical to the success of the exchanges, the HHS said.

“For the first time, funding will be directed to states that are willing and able to lead the race to develop IT systems. These systems can then be used as models by all states in their efforts to establish exchanges,” according to an HHS announcement.

Prior to the grant funding, some state officials had worried that development of the online exchanges would become an unfunded mandate within the government health-care plan. But that worry appears to be unfounded. In September, the HHS awarded $1 million apiece to 48 states and the District of Columbia for research and planning for the health insurance exchanges. The HHS also announced Friday that additional grants would be announced next year for ongoing implementation of the exchanges.