The Center for Consumer Information & Insurance Oversight

Health Insurance Exchanges: State Planning and Establishment Grants

Today, many individuals and small businesses are on their own when trying to find affordable health insurance. The lack of transparency in the insurance market, combined with the inability of individuals and small businesses to band together to purchase insurance, results in higher insurance premiums. And health insurance companies benefit from a system where it is difficult for consumers to compare benefits and prices.

The Affordable Care Act helps create a new competitive private health insurance market – through State-run health insurance Exchanges – that will give millions of Americans and small businesses access to affordable coverage, and the same choices of insurance that members of Congress will have.

On September 30th, HHS announced $49 million dollars in grants to help 48 States and the District of Columbia plan for the establishment of these health insurance Exchanges. These grants of up to $1 million each will provide States with resources to conduct the research and planning needed to build a better health insurance marketplace and determine how their Exchanges will be operated and governed. Future funding will support development and implementation activities that States will undertake through 2014.

States will use these funds in a variety of initial planning activities, including:

  • Assessing current information technology (IT) systems and infrastructure and determining new requirements.
  • Developing partnerships with community organizations to gain public input into the Exchange planning process.
  • Planning for consumer call centers to answer questions from their residents.
  • Determining the statutory and administrative changes needed to build the exchanges.
  • Hiring key staff and determining ongoing staffing needs.
  • Planning the coordination of eligibility and enrollment systems across Medicaid, CHIP, and the Exchanges.
  • Developing performance metrics, milestones and ongoing evaluation.

Find a State-by-State list of some of these initial planning activities here. 

Although State-based health insurance Exchanges are not required to be operational until 2014, work is already underway to conduct the necessary market research and planning. These planning grants begin the path toward 2014 when health insurance Exchanges will take what is now a very complicated and confusing process and turn it into a simple, easy to navigate experience that benefits consumers, not insurance companies. Health insurance Exchanges will create:

  • Lower Costs: Exchanges will increase competition among private insurance plans through greater comparative shopping and more informed consumers. They will also provide small businesses the same purchasing power in Exchanges as large businesses.
  • One-Stop Shopping: The Exchanges will make purchasing health insurance easier by providing eligible consumers and businesses with tools to compare benefits, pricing and quality. Americans who choose to use them will also have access to a wide range of customer assistance benefits – including information about prices, quality, and physician and hospital networks – to help make the best choice for themselves, their families, or their employees.
  • Greater Benefits and Protections: Exchanges will create a health insurance marketplace that will allow employers and consumers to choose from plans offering high quality benefits. Individuals and families purchasing health insurance through Exchanges may also qualify for tax credits and reduced cost-sharing depending on their income.

The grants announced today are the first step to thoughtfully and carefully move forward in establishing the health insurance Exchanges that will help meet the health coverage needs of Americans.


UPDATE:  Territory Establishment Grants

Awarded March 21, 2011

On March 21, 2011 grant awards were made to four Territories to conduct activities necessary to make an Exchange operational. Examples include background research, including a market analysis of each Territory’s insurance market and projected Exchange enrollment, establishment of effective capacity for providing assistance to individuals, and initial stakeholder consultation.

Find a Territory-by-Territory list of some of these establishment activities here.

Posted: July 29, 2010

Updated: March 22, 2011