States Proceed With Health Insurance Exchanges

California, Connecticut, Hawaii, Iowa, Maryland, Nevada, New York, and Vermont have received new grants from the federal government to help support the establishment of Affordable Insurance Exchanges, provided by the Patient Protection and Affordable Care Act. Starting in 2014, consumers and small businesses will have access to high-quality, affordable health insurance through an Exchange—an online marketplace where consumers can choose a private health insurance plan that, it is hoped, will fit their health needs and, maybe, budgets.


According to the U.S. Department of Health and Human Services (HHS), Exchanges will level the health insurance playing field, so that small businesses will have a better choice of plans and insurers at a lower cost, the way larger employers do now. These competitive health insurance marketplaces will make purchasing health insurance easier and more understandable and offer consumers and small businesses increased competition and choice, HHS said.

In addition, small employers will be eligible to receive tax credits for coverage purchased for employees through the Exchange. And, consumers will be able to learn if they are eligible for tax credits and cost-sharing reductions, or other health care programs like the Children’s Health Insurance Program.

This latest round of awards will give states additional resources and flexibility to establish an Exchange. On August 23, California, Hawaii, Iowa, and New York were awarded Level One Exchange Establishment grants, which provide one year of funding to states that have begun the process of building their Exchange. Connecticut, Maryland, Nevada, and Vermont were awarded Level Two Establishment grants, which are provided to states that are further along in building their Exchange and offers funding over multiple years.

Previously, 49 states, the District of Columbia and four territories received grants to begin planning their Exchanges. With the new grants, 34 states and the District of Columbia also have received Establishment grants to begin building their Exchanges.

In June 2012, HHS announced an initiative to provide states with ten additional opportunities to apply for funding to establish a state-based Exchange, state Partnership Exchange, or to prepare state systems for a Federally-facilitated Exchange. States can apply for Exchange grants through the end of 2014, and may use funds during the initial start-up year. This schedule ensures that states have the support and time necessary to build an Exchange that best fits the needs of their residents.