Health and Human Services (HHS) Secretary Kathleen Sebelius gave $1.5 billion in new Exchange Establishment Grants to California, Delaware, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, New York, North Carolina, Oregon, and Vermont to support the continued build-out of health insurance exchanges in those states. All states are required to have an exchange of some sort by the start of 2014 to provide an online, comparative marketplace of insurance policies offered in their area. States can either administer their own exchange, partner with HHS or let HHS run it entirely. States that opt out of being involved in their exchange in some way will not receive support funding from HHS.
Delaware, Iowa, Michigan, Minnesota, North Carolina, and Vermont received awards for Level One Exchange Establishment Grants, which are one-year grants states will use to build marketplaces. California, Kentucky, Massachusetts, New York, and Oregon received Level Two Exchange Establishment Grants. Level Two grants are multi-year awards to states to further develop their marketplaces.
California’s grant was one of the largest of the lot. The state received $674 million for its Level Two grant. The state is working with Accenture to build out its exchange and already awarded that company the largest of the exchange grants in the US. California was officially approved by HHS as a state-based exchange on January 3 of this year.
The online portal will be available for California residents to use by October 1, 2013. According to exchange managers at Covered California, the office running the exchange, officials have been working with private insurers to fundamentally change the cost structure and scope of coverage available in California. They want everything to be more affordable and comprehensive in an effort to ensure all Californians more efficiently.
Given the size of the exchange, if they are successful, Covered California could serve as a national model for cost containment on health insurance. Private plans are expected to submit their proposals to the exchange this week.