Establishing Affordable Insurance Exchanges

July 13, 2011
Laura Mortkowitz

The U.S. Department of Health and Human Services has proposed rules and guidelines as states set up individual Insurance Exchanges before 2014.

As a part of the Affordable Care Act, Americans will have access to Affordable Insurance Exchanges in 2014. These competitive marketplaces will be state based and allow individuals and small businesses to purchase affordable private health insurance. And the U.S. Department of Health and Human Services proposed on Monday a framework to build these marketplaces.

There are two key areas that the HHS is offering states guidance. The first has to do with setting up and establishing Exchanges and other programs and plans available through the Exchange. The second area is ensuring stability for plans and enrollees during the early years of the Exchange.

“Exchanges offer Americans competition, choice, and clout,” HHS Secretary Kathleen Sebelius said in a statement. “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 proposed rules are the minimum standards for Exchanges, so states have the flexibility to design Exchanges that best fit their unique insurance markets.

The purpose of the Exchanges is to make it easy for individuals and small businesses to compare health plans and become more knowledgeable about health insurance and tax credits.

Forty-nine states, the District of Columbia and four territories 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 today’s announcement builds on that momentum by giving states flexibility to design the Exchange that works for them,” Steve Larsen, director of the Center for Consumer Information and Insurance Oversight, said in a statement. “This regulation allows us to meet states where they are.”