More than 20 States and DC Move Forward on Establishing Health Insurance Exchanges, Others Have Second Thoughts

Today, Secretary Sebelius announced awards to 13 states and the District of Columbia of over $185 million in health insurance exchange establishment grants. These jurisdictions join three other states who received establishment grants on May 23, 2011 and seven “early innovator” grants in February 2011. These grants follow the exchange planning grants that 49 states and D.C. received in 2010.

Some states, however, have had second thoughts about accepting federal funds to establish health insurance exchanges, required by the Affordable Care Act to be in place by Jan. 1, 2014.

First, Minnesota and Alaska opted out of the $1 million planning grants in 2010, although Alaska later accepted the funds.

In April 2011, Oklahoma Governor Mary Fallin rejected a $54.6 million early innovator grant. She said the state will use state and private money to establish its own exchange.

Then on August 9, Kansas Governor Brownback announced his state also will return their early innovator grant, worth  $31.5 million. Kaiser Health News reported Gov. Brownback cited the federal government’s debt obligations and said he was returning the money because of doubts that Washington D.C. would be able to maintain its promised future payments.

The five remaining early innovator grant recipients are Maryland, a New England multi-state consortia, New York, Oregon, and Wisconsin.

Proposed Regulations Released

Also today, Secretary Sebelius sent a letter to all states’ governors to solicit comments from states on how the federal government can build on what she called "the substantial flexibility" states have when designing a health insurance exchange that works for them.

The proposed rules issed today by HHS and Treasury focus on the following:

  • Easy, Simple Access to Coverage for Consumers and Small Businesses:New rules will make it easy for consumers to enroll in high-quality health plans and get help paying for health coverage through premium tax credits and cost sharing reductions. 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. Read more here.
  • Health Insurance Premium Tax Credit:Individuals and families will receive premium tax credits to help defray insurance costs, increasing access to health coverage for millions of middle class American families. Read more here.
  • 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. Read more here. Click here for Federal Register.

In the weeks ahead, the Obama administration says it will conduct an aggressive outreach campaign and ask for public comment on the three proposed rules from employers, consumers, state leaders, health care providers and insurers, and the American people. In addition to accepting written public comments for the next 75 days, the departments will hold forums in Atlanta, Chicago, Denver, New York, Portland and Sacramento.

Summary of State Health Insurance Exchange Grants

A summary of federal funding awards to states and states’ activities towards establishing health insurance exchanges is below. All other states, except Minnesota, have only received $1 million planning grants. The next round of “establishment” grants are due September 30, 2011.

Administrator:California Health Benefit Exchange
Amount Awarded: $38,421,383
Summary: California will engage in planning, research and early implementation as appropriate in all 11 core areas identified in the federal Department of Health and Human Services application. This funding will help the state develop policy goals for the California Exchange as well as secure staff consultants and expert resources and actively engage stakeholders to inform and support Exchange planning and implementation activities. Level One resources will provide the information, data and consideration of options to support the state’s preparation and submission of a Level Two Exchange grant in spring 2012, leading to full implementation and operation of the Exchange by 2014.

Administrator:Connecticut Office of Policy and Management
Amount Awarded:  $6,687,933
Summary: Connecticut will focus on three projects with this grant award. The first project is to determine the administrative issues involved in starting an Exchange, including the hiring of Exchange leadership and procurement of office space. The second project will build on the research provided by its Exchange Planning Grant and conduct a thorough analysis of information technology capabilities to focus on business process and information technology used in the Exchange.  The third project is to develop appropriate capacity for consumer assistance and reporting requirements.

District of Columbia
Administrator:District of Columbia Department of Health Care Finance
Amount Awarded: $8,200,716
Summary: Washington, DC will use its Level One Establishment Grant Funds continue and complete current planning and implementation efforts that would enable the District to establish a certified and functioning exchange by January 2014. The District estimates that approximately 225,000 of the District’s residents are expected to utilize District Exchange Services. The District’s Exchange project development staff has been working to establish a planning and requirements gathering framework for designing an Exchange that is representative of the unique health insurance needs of District residents and that reflects the preferences of stakeholders.  This Level One funding will leverage the data, information and indicators gathered in the preliminary planning effort into a comprehensive project design document to be used to stand up the exchange in Level Two.

Administrator: Indiana Family and Social Services Administration
Award Amount: $6,895,126
Summary: Indiana will use resources from the Affordable Care Act to strengthen the health information technology systems that will be integral to its Exchange. Additional funding will support project management, legal, actuarial, and financial expertise and general policy support.

Administrator:Illinois Department of Insurance
Amount of Award: $5,128,454
Summary: Illinois will use its resources provided by the Affordable Care Act to conduct additional Exchange research that will examine issues related to Risk-Adjustment/Reinsurance, Navigator Function, Certification of Qualified Health Plans, and SHOP Exchange. The state will build upon the Governor’s Health Reform Website where Stakeholders can offer their input. The state also plans on developing an Exchange Education Toolkit that it will make available both in print and online.  To address Exchange IT Systems, the state will begin to design both the business requirements of the Exchange and IT detailed design for Illinois-specific aspects of the Exchange infrastructure. The state will also hire a fulltime employee for the Exchange who will manage the various fiscal responsibilities.

Administrator:Kentucky Cabinet for Health and Family Services
Amount Awarded: $7,670,803
Summary: Kentucky will use its grant to continue the state’s Exchange planning efforts. Much of the funding will be used for Information Technology systems (IT) to support the definition of business requirements, the procurement of an IT planning vendor, assistance with drafting an RFP for procurement of IT upgrades/and or new systems. The State would also focus heavily on outlining business operations for the Exchange.

Maryland (early innovator)
Grantee: Maryland Dept of Health and Mental Hygiene
Award Amount: $6,227,454
Summary: Maryland proposes to build off a prototype it has already developed that models the point of access for the Exchange, integration with Maryland legacy systems and the federal portal systems, and Maryland's consumption of planned federal web services (e.g. verification and rules). The technology foundation used by Maryland in its Healthy Maryland initiative is currently being used by several other states. This “point” solution will extend the existing Healthy Maryland platform, which was recently implemented.

Administrator:Maryland Department of Health and Mental Hygiene
Amount Awarded: $27,186,749
Summary: Maryland will conduct policy development and detailed planning to build on the work of Maryland’s Exchange Planning Grant and Maryland’s Innovator Grant. The Level One Establishment Grant will result in data-driven and intensive policy analysis that will shape the technical and operational infrastructure of the Exchange. In addition, the activities performed with this funding will result in the rapid implementation of the Exchange IT platform, including product licensing, system integration, and independent verification and validation. The IT platform will be flexible to respond to forthcoming federal guidance and ongoing policymaking and input from Maryland stakeholders.

Administrator:Minnesota Department of Commerce
Amount Awarded: $4,168,071
Summary: Minnesota will use its resources under the Affordable Care Act to build on the Limited-Competition Exchange Planning grant it received in February 2011. Minnesota will focus on developing its Exchange information technology infrastructure. Minnesota also will establish an initial governance structure within the Minnesota Department of Commerce with full-time staff dedicated to the development of Minnesota’s Exchange. The state will also create and maintain an Advisory Task Force to provide guidance on the establishment of an Exchange. The state is requesting funding to develop and execute work plans, timelines, and budget and cost-allocation estimates through 2014. Minnesota will also designate a Chief Financial Officer to create and execute detailed work plans related to financial management, program integrity, and Exchange financing mechanisms.

Administrator:Mississippi Department of Insurance
Amount Awarded: $20,143,618
Summary: Mississippi will continue its planning for the establishment of a state-operated health benefit Exchange. Mississippi will: conduct an extensive public education and outreach program to inform consumers about access the health insurance through the exchange; continue to coordinate with Medicaid, CHIP and other appropriate programs regarding eligibility determination and other Exchange activities; and provide assistance to individuals and small businesses.

Administrator:Missouri Health Insurance Pool
Amount Awarded: $20,865,716
Summary: Missouri will build on its significant Exchange planning progress to implement a single, statewide exchange. Missouri will: build the exchange IT system, which will be highly coordinated with state agencies to enable a streamlined, single-portal eligibility and enrollment system; expand its existing stakeholder engagement process to facilitate deeper dialogue and leverage expertise on targeted topics; and, establish the appropriate levels of financial oversight and control to ensure program integrity.

Administrator:Nevada Department of Health and Human Services
Amount Awarded: $4,045,076
Summary: Nevada will use funding to: develop a rules-based eligibility engine that will serve as the single, streamlined eligibility process for all medical assistance programs, including Medicaid, Nevada Check Up (the state’s CHIP program) and the Exchange; prepare business and IT systems requirements for non-eligibility-related functions of the Exchange, and develop an operational plan;  create a financial management and sustainability model; enhance Nevada’s consumer assistance; engage stakeholders and consult with Nevada’s Native American Tribal community; prepare statutory and regulatory changes for commercial health insurance, as required by the Patient Protection and Affordable Care Act; assess the impact to the commercial health insurance market from regulatory changes, the “essential health benefits” requirements, and the introduction of an Exchange as a purchasing platform in the individual and small group markets; and, review existing programs to identify opportunities to leverage services, functions and resources that may be applicable to the Exchange, as well as opportunities to modify existing programs in light of the coverage expansions that will take effect in 2014.

New England Multi-State Consortia (early innovator grant)
University of Massachusetts Medical School
Award Amount: $35,591,333
Summary:This is a multi-state consortia proposal led by the University of Massachusetts Medical School and will include individuals and small businesses in Connecticut, Maine, Massachusetts, Rhode Island, and Vermont. These consumers will be able to shop for, select, and purchase affordable and high-quality health plans consistent with national reform goals for 2014. The proposed project approach will be to create and build a flexible Exchange information technology framework in Massachusetts and share those products with other New England states. The proposal hopes to learn from the Massachusetts Exchange implementation and gain efficiencies so it can accelerate Exchange development for participating New England states.

New York (early innovator grant)
New York Department of Health
Award Amount: $27,431,432
Summary:New York proposes to build off its eMedNY Medicaid Management Information System (MMIS) system to build products for the Exchange. The eMedNY Medicaid Management Information System (MMIS) processes payments for approximately one of every three health care dollars paid in the state. It is also the primary source of Medicaid data used for financial reporting, program analysis, auditing, and quality measurement. The Department plans to use MMIS’ assets as the basis for designing and developing an Exchange to serve all New York State health insurance consumers. This approach will also result in the development of Exchange IT components fully extensible and scalable to any other jurisdiction.

New York
Administrator:New York State Department of Health
Amount Awarded: $10,774,898
Summary: New York has made significant progress under its exchange planning grant, early innovator grant, and consumer assistance program grant. This funding will: support background research; seek stakeholder input through a series of policy discussions focused on Exchange design and operation options; fund IT Systems; expand the capacity of its consumer assistance to serve the needs of small businesses, to expand assistance to individuals in regions of the State that currently have limited in-person access and expand consumer assistance with commercial insurance issues. The proposal also requests funding for key staff to begin the process of implementing the Exchange around governance.

North Carolina
Administrator:North Carolina Department of Insurance
Amount Awarded: $12,396,019
Summary: North Carolina will engage stakeholders, prepare analyses of outstanding policy decisions, and expand the existing eligibility system of the North Carolina Department of Health & Human Services to accommodate the Exchange. The state will also: develop requirements for the non-eligibility related Exchange functions to prepare any necessary procurements; prepare North Carolina’s consumer assistance program in anticipation of 2014 requirements; develop a work plan, budget, and evaluation plan for the North Carolina Health Benefit Exchange (NCHBE); develop a post-2014 financial sustainability plan; and support initial operational activities of NCHBE.

Oregon (early innovator grant)
Oregon Health Authority
Award Amount: $48,096,307
Summary:Oregon is using commercially available, off-the-shelf software to create the Exchange. The Exchange Early Information Technology Innovation Grant will help Oregon create a modular, reusable IT solution that will provide the Exchange’s customers with seamless access to information, financial assistance and easy health insurance enrollment, with no gaps in coverage or assistance cliffs for anyone up to 400% of the federal poverty level. The OHA estimates that 516,000 Medicaid clients and 277,000 commercial insurance consumers will use the Health Insurance Exchange to shop for and enroll in health coverage.

Administrator:  Oregon Health Insurance Exchange Corp
Amount Awarded: $8,969,600
Summary: The Health Insurance Exchange builds on Oregon’s past and current health reform efforts. Oregon has been studying an Exchange model for several years and is an Early Innovator IT grantee. This Establishment grant will support the state’s continued progress toward Exchange implementation.  Funding will support the final design and initial implementation of the Exchange’s business and operations plan. To bring the business and operations plan to life, Oregon will use funding to: hire an Executive Director and key staff; build a financial management plan and structures; finalize waste , fraud,  and abuse plans; appoint a Board of Directors to provide oversight and management; finalize interagency agreements with relevant agencies; develop transition plans for state programs and their enrollees; consult with stakeholders; determine whether additional risk mediation activities are required; finalize protocols and payment rules for producers and Navigators; develop marketing and communications strategies; begin evaluation activities; and create a detailed business plan in preparation for the February 2012 Legislative Session.

Rhode Island
Administrator: Rhode Island Department of Business Regulation
Intended Award Amount: $5,240,668
Summary: Rhode Island will use resources from the Affordable Care Act to strengthen health information technology systems, develop an integrated consumer support program to provide support to individuals and small businesses, and strengthen its business operations

Administrator: Washington State Health Care Authority
Intended Award Amount: $22,942,671
Summary: Washington will use resources from the Affordable Care Act to develop options and recommendations on policy decisions that will have a significant impact on the Exchange. The grant will also provide funds to develop a health information technology system that will support its Exchange.

West Virginia
Administrator:West Virginia Offices of the Insurance Commissioner
Amount Awarded: $9,667,694
Summary: West Virginia will provide for several consumer quality and effectiveness related studies to ensure an efficient and value driven market transition into the Exchange, including further funding for actuarial services and economic modeling as envisioned under the Planning Exchange Grant. West Virginia will also use funding to: create tools for successful risk adjustment; undertake an Exchange issuer initiative and complete a producer and navigator strategic plan; allow for continued policy integration with constituent state agencies; and, develop a business and operational plan that will ensure financial sustainability by January 2015.

Wisconsin (early innovator grant)
Wisconsin Department of Health Services
Award Amount:  $37,757,266
Summary:Wisconsin anticipates that the health insurance exchange will help drive improvements in the delivery of affordable, quality care for up to 160,000 individuals in the non-group market, one million employees of small businesses, and 770,000 participants in the BadgerCare Plus and Medicaid programs, representing nearly 35% of the state’s population. Wisconsin’s proposal envisions a single, intuitive portal through which residents can access subsidized and non-subsidized health care and other state-based programs (e.g. Medicaid, CHIP, child care). The Exchange will integrate across health and human services programs to promote efficiency and lower overall administrative cost.