Health Insurance Exchange Establishment Grants Fact Sheet

Health Insurance Exchange Establishment Grants Fact Sheet

When the Affordable Care Act is fully implemented in 2014, individuals and small businesses will have access to affordable coverage through a new competitive private health insurance market – State-based Health Insurance Exchanges.  

Health Insurance Exchanges will provide individuals and small businesses with a “one-stop shop” to find and compare affordable, quality health insurance options.  With these Exchanges, Americans will no longer be on their own in trying to find comprehensive, affordable health coverage.  Exchanges will bring new transparency to the market so that consumers will be able to compare plans based on price and quality.  By increasing competition between insurance companies and allowing individuals and small businesses to band together to purchase insurance, Exchanges will lower costs.

On January 20, 2011, the U.S. Department of Health and Human Services (HHS) announced a new funding opportunity for grants to help States continue their work to implement this key provision of the Affordable Care Act – Health Insurance Exchanges. 

States Moving Forward to Implement Key Affordable Care Act Provisions

The Obama Administration has continued to work closely with States to implement many provisions of the Affordable Care Act.  States have received new resources to crack down on unreasonable health insurance premiums, to help strengthen and enhance ongoing efforts in the States and local communities to protect consumers from some of the worst insurance industry practices – and to help plan for Health Insurance Exchanges. 

Because each State has different needs and goals, we are committed to making sure States have the flexibility they need to develop and implement their Health Insurance Exchanges.  States are already taking their first steps toward 2014 when Health Insurance Exchanges will be operational.  Many of those activities have been funded by the $49 million in Exchange planning grants awarded by HHS in July of 2010.  States applied to use those grants for a number of important planning activities including research to understand their insurance markets, efforts to obtain the legislative authority to create Exchanges, and steps to establishing the governing structures of Exchanges.  Several examples of the activities States are undertaking to implement the Exchanges include:

  • California signed first-in-the-nation legislation to implement a Health Insurance Exchange under the Affordable Care Act on September 30, 2010.  Already, the State is moving forward to create an independent, fully-transparent California Exchange Benefit, including appointing a board.  California is also moving forward on efforts to strengthen review of health insurance premium increases.
  • Maryland’s Health Reform Coordinating Council is working with stakeholders and the public on how to best implement a Health Insurance Exchange.  The State has already carried out research to understand Maryland’s health insurance marketplace and health expenditures, as well as how to make health care costs and quality more transparent.
  • Colorado is also conducting extensive research and economic analysis of its health insurance markets to help policymakers understand the potential impacts of different options for structuring the Exchanges.  The State is also holding regular community forms and making information available to the public.

Health Insurance Exchange Establishment Grants

The Exchange establishment grants announced on January 20, 2011 recognize that States are making progress toward establishing Exchanges but are doing so at different paces.  States that are moving ahead on a faster pace can apply for multi-year funding.  States that are making progress in establishing their Exchange through a step-by-step approach can apply for funding for each project year. 

States may initially apply for either level one or level two establishment grants, based on their progress.  State can also choose when during this year to apply for grant funding based on their needs and planned expenditures.  Moving forward, States will have multiple opportunities to apply for funding as they progress through the Exchange establishment process.  This process gives States maximum flexibility and ensures that States can move forward on their own timetables as they work to build an Exchange. 

Level One Establishment Grants:  These grants provide up to one year of funding to States that have made some progress under their Exchange planning grant.  States may plan to reapply for a second year of funding under the level one establishment grants if necessary to meet the criteria to apply for level two establishment grants.

Level Two Establishment Grants:  This category of grants is designed to provide funding through December 31, 2014 to applicants that are further along in the establishment of an Exchange.  In applying for level two establishment grants, States must meet specific eligibility criteria, including that the State has:

  • Legal authority to establish and operate an Exchange that complies with Federal requirements available at the time of the application;
  • A governance structure for the Exchange;
  • A budget and initial plan for financial sustainability by 2015;                               
  • A plan outlining steps to prevent fraud, waste, and abuse; and
  • A plan describing how consumer assistance capacity in the State will be created, continued, and/or expanded, including provision for a call center.

These criteria provide a basic framework, but also provide States with an enormous amount of flexibility to build Exchanges that meet their needs.  States can use the Exchange establishment grants for a number of different activities including conducting background research, consulting with stakeholders, making legislative and regulatory changes, governing the exchange, establishing information technology systems, conducting financial management and performing oversight and ensuring program integrity.

Health Insurance Exchange: Helping Consumers with Health Insurance

Through the Health Insurance Exchanges, HHS is partnering with States to take the often complicated process individuals and small businesses face in purchasing insurance on their own and turn it into a simple, easy to navigate experience that benefits consumers rather than insurance companies.

Today, individuals and small businesses looking to buy health insurance are often on their own.  But once health reform is fully implemented in 2014, insurers will no longer be able to use a person’s health status to determine eligibility, benefits or premiums.  Starting in 2014, Health Insurance Exchanges will:

  • Lower Costs: Exchanges will increase competition among private insurance plans through greater comparative shopping and more informed consumers. And by pooling people together, Exchanges will also give small businesses the same purchasing power that large businesses enjoy today.
  • Provide 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.
  • Offer 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 premium tax credits and reduced cost-sharing depending on their income.

To learn more about this funding opportunity, visit the news release. For the grant application, go to www.Grants.gov and search for CFDA number 93.525.  For information about the Exchange planning grants, visit www.HealthCare.gov/news/factsheets.

Posted: January 20, 2011

Page Last Modified:
09/10/2024 06:11 PM