HHS proposes standards for establishing Health Insurance Exchanges

The U.S. Department of Health and Human Services (HHS) has proposed a framework to assist states in building health insurance exchanges, state-based competitive marketplaces authorized by 2010's federal health insurance legislation. Individuals and small businesses will be able to purchase affordable private health insurance via these Exchanges. Starting in 2014, Exchanges will make it easy for individuals and small businesses to compare health plans, get answers to questions, find out if they are eligible for tax credits for private insurance or health programs like the Children's Health Insurance Program (CHIP), and enroll in a health plan that meets their needs.


"Exchanges offer Americans competition, choice, and clout," according to HHS Secretary Kathleen Sebelius. "Insurance companies will compete for business on a transparent, level playing field, driving down costs; and Exchanges will give individuals and small businesses the same purchasing power as big businesses and a choice of plans to fit their needs."



The recent HHS announcement is designed to help support and guide states in their efforts to implement Exchanges. HHS proposed new rules offering states guidance and options on how to structure their Exchanges in two key areas:

• Setting standards for establishing Exchanges, setting up a Small Business Health Options Program (SHOP), performing the basic functions of an Exchange, and certifying health plans for participation in the Exchange, and;
• Ensuring premium stability for plans and enrollees in the Exchange, especially in the early years as new people come in to Exchanges to shop for health insurance.

These proposed rules set minimum standards for Exchanges, give states the flexibility they need to design Exchanges that best fit their unique insurance markets, and are consistent with steps states have already taken to move forward with Exchanges.


States leading the way. According to HHS, 49 states, the District of Columbia and four territories have accepted grants to help plan and operate Exchanges. In addition, over half of all states are taking additional action beyond receiving a planning grant such as passing legislation or taking Administrative action to begin building exchanges. States will continue to implement exchanges on different schedules through 2014.
 
"States are leading the way in implementing health reform" and the HHS proposal "builds on that momentum by giving states flexibility to design the Exchange that works for them," says Center for Consumer Information and Insurance Oversight Director Steve Larsen. "This regulation allows us to meet states where they are."


Ongoing process. The proposals build on over a year's worth of work with states, small businesses, consumers and health insurance plans and offer states substantial flexibility, HHS indicates. For example, it allows states to decide whether their Exchanges should be local, regional, or operated by a non-profit organization, how to select plans to participate, and whether to partner with HHS to split up the work.

According to HHS, in drafting these proposals, the administration examined models of Exchanges, held numerous meetings with stakeholders and consulted closely with state leaders, consumer advocates, employers and insurers. To continue that conversation, HHS is accepting public comments on the proposed rules over the next 75 days to learn from states, consumers, and other stakeholders how the rules can be improved and HHS will modify these proposals based on feedback from the American people. To facilitate that public comment process, HHS will convene a series of regional listening sessions and meetings.


To reduce duplication of effort and the administrative burden on the states, HHS also announced that the federal government will partner with states to make Exchange development and operations more efficient. States can choose to develop an Exchange in partnership with the federal government or develop these systems themselves. This provides states more flexibility to focus their resources on designing the right Exchanges for their local insurance markets.